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Dynamics of residential water consumption in a panel of Italian municipalities

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  • Antonio Musolesi
  • Mario Nosvelli

Abstract

The purpose of this study is to estimate a residential water demand function in a dynamic framework for a panel of Italian municipalities and to calculate both short-run and long-run price elasticities. The Generalized Method of Moments (GMM) provides a suitable framework for obtaining asymptotically efficient estimators in this context. Specifically, the system GMM estimator is applied, which improves the properties of the standard first-difference estimator. The most relevant result shows that persistence of habits is coupled with high long-term price elasticity which is higher, in absolute value, that the instantaneous (one-year) price elasticity. Under an economic policy perspective, the effects of policy interventions can be suitably evaluated only in the long-run.

Suggested Citation

  • Antonio Musolesi & Mario Nosvelli, 2007. "Dynamics of residential water consumption in a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 441-444.
    • Handle: RePEc:taf:apeclt:v:14:y:2007:i:6:p:441-444
    DOI: 10.1080/13504850500425642
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    6. Massimiliano Mazzanti & Anna Montini, 2006. "The determinants of residential water demand: empirical evidence for a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 107-111.
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