Economic Development, Energy Market Integration and Energy Demand: Implication for East Asia
This paper uses the General Method of Moment (GMM) regression technique to estimate an cross-country energy demand function with a data set covering 71 countries over the period of 1965-2010. The estimated results show that rapid economic growth due to industrialization and urbanization tends to increase the energy consumption per capita, which in turn may generate a surge in the overall demand for energy. As is shown in the econometric results, an increase in economic growth (i.e. the dummy of GDP level) may increase 0.6 per cent of energy consumption per capita. Moreover, economic growth also leads to lower price and income elasticities (in absolute terms). However, energy market integration can help to reduce the energy demand pressure and to smooth the demand shock through decreasing the income elasticity and increasing the price elasticity in particular in the long run. This finding can be used to explain how cross-country institutional arrangement related to energy market may affect regional energy consumption patterns over the period of rapid economic growth and offer policy implications for East Asia, which is diversified in terms of development level.
|This chapter was published in: ||This item is provided by Economic Research Institute for ASEAN and East Asia (ERIA) in its series Chapters with number
2011-rpr-17-02.||Handle:|| RePEc:era:chaptr:2011-rpr-17-02||Contact details of provider:|| Postal: The ASEAN Secretariat Mezzanine Floor, 70A Jl.Sisingamangaraja, Jakarta 12110|
Web page: http://www.eria.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Subramanian, Arvind & Wei, Shang-Jin, 2007.
"The WTO promotes trade, strongly but unevenly,"
Journal of International Economics,
Elsevier, vol. 72(1), pages 151-175, May.
- Subramanian, Arvind & Wei, Shang-Jin, 2005. "The WTO Promotes Trade, Strongly But Unevenly," CEPR Discussion Papers 5122, C.E.P.R. Discussion Papers.
- Shang-Jin Wei & Arvind Subramanian, 2003. "The WTO Promotes Trade, Strongly But Unevenly," IMF Working Papers 03/185, International Monetary Fund.
- Arvind Subramanian & Shang-Jin Wei, 2003. "The WTO Promotes Trade, Strongly But Unevenly," NBER Working Papers 10024, National Bureau of Economic Research, Inc.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Blundell, R. & Bond, S., 1995.
"Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,"
104, Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Dargay, Joyce M. & Gately, Dermot, 2010. "World oil demand's shift toward faster growing and less price-responsive products and regions," Energy Policy, Elsevier, vol. 38(10), pages 6261-6277, October.
- Ferguson, Ross & Wilkinson, William & Hill, Robert, 2000. "Electricity use and economic development," Energy Policy, Elsevier, vol. 28(13), pages 923-934, November.
- Yoo, S.-H., 2006. "The causal relationship between electricity consumption and economic growth in the ASEAN countries," Energy Policy, Elsevier, vol. 34(18), pages 3573-3582, December.
- Maddala, G S, et al, 1997. "Estimation of Short-Run and Long-Run Elasticities of Energy Demand from Panel Data Using Shrinkage Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 90-100, January.
- David Roodman, 2009.
"How to do xtabond2: An introduction to difference and system GMM in Stata,"
StataCorp LP, vol. 9(1), pages 86-136, March.
- David Roodman, 2006. "How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata," Working Papers 103, Center for Global Development.
- World Bank, 2012. "World Development Indicators 2012," World Bank Publications, The World Bank, number 6014, November.
- Yu SHENG & Xunpeng SHI, 2011.
"Energy Market Integration and Economic Convergence: Implications for East Asia,"
DP-2011-05, Economic Research Institute for ASEAN and East Asia (ERIA).
- Yu Sheng & Xunpeng Shi, . "Energy Market Integration and Economic Convergence: Implications for East Asia," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
- Paul Brenton, 1997.
"Estimates of the demand for energy using cross-country consumption data,"
Taylor & Francis Journals, vol. 29(7), pages 851-859.
- Brenton, P., 1995. "Estimates of the Demand for Energy Using Cross-Country Consumption Data," Discussion Papers 95-25, Department of Economics, University of Birmingham.
- Karki, Shankar K. & Mann, Michael D. & Salehfar, Hossein, 2005. "Energy and environment in the ASEAN: challenges and opportunities," Energy Policy, Elsevier, vol. 33(4), pages 499-509, March.
- Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
- Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
- Jones, Donald W., 1991. "How urbanization affects energy-use in developing countries," Energy Policy, Elsevier, vol. 19(7), pages 621-630, September.
- Garcia-Cerrutti, L. Miguel, 2000. "Estimating elasticities of residential energy demand from panel county data using dynamic random variables models with heteroskedastic and correlated error terms," Resource and Energy Economics, Elsevier, vol. 22(4), pages 355-366, October.
When requesting a correction, please mention this item's handle: RePEc:era:chaptr:2011-rpr-17-02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hiroshi Okasaki)
If references are entirely missing, you can add them using this form.