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A Residential Energy Demand System for Spain

  • Xavier Labandeira
  • José M. Labeaga
  • Miguel Rodríguez

Sharp price fluctuations and increasing environmental and distributional concerns, among other issues, have led to a renewed academic interest in energy demand. In this paper we estimate, for the first time in Spain, an energy demand system with household microdata. In doing so, we tackle several econometric and data problems that are generally recognized to bias parameter estimates. This is obviously relevant, as obtaining correct price and income responses is essential if they may be used for assessing the economic consequences of hypothetical or real changes. With this objective, we combine data sources for a long time period and choose a demand system with flexible income and price responses. We also estimate the model in different sub-samples to capture varying responses to energy price changes by households living in rural, intermediate and urban areas. This constitutes a first attempt in the literature and it proved to be a very successful choice.

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Paper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0501.

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Date of creation: Feb 2005
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Handle: RePEc:mee:wpaper:0501
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  1. Christopher J. Nicol, 2001. "The rank and model specification of demand systems: an empirical analysis using United States microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 259-289, February.
  2. Arthur Lewbel, 2000. "A Rational Rank Four Demand System," Boston College Working Papers in Economics 463, Boston College Department of Economics, revised 04 Apr 2003.
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  4. Richard Blundell & Jean-Marc Robin, 2000. "Latent Separability: Grouping Goods without Weak Separability," Econometrica, Econometric Society, vol. 68(1), pages 53-84, January.
  5. Lyssiotou, Panayiota & Pashardes, Panos & Stengos, Thanasis, 1999. "Testing the rank of Engel curves with endogenous expenditure," Economics Letters, Elsevier, vol. 64(1), pages 61-65, July.
  6. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
  7. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
  8. R, Blundell & Jean-Marc Robin, 1997. "Estimation in Large and Dissagregated Demand Systems : An Estimator for Conditionally Linear Systems," Working Papers 97-08, Centre de Recherche en Economie et Statistique.
  9. Pashardes, Panos, 1995. "Equivalence scales in a rank-3 demand system," Journal of Public Economics, Elsevier, vol. 58(1), pages 143-158, September.
  10. Soren Leth-Petersen, 2002. "Micro Econometric Modelling of Household Energy Use: Testing for Dependence between Demand for Electricity and Natural Gas," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 57-84.
  11. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, . "Microsimulating the Effects of Household Energy Price Changes in Spain," Studies on the Spanish Economy 196, FEDEA.
  12. Nicol, C. J., 2003. "Elasticities of demand for gasoline in Canada and the United States," Energy Economics, Elsevier, vol. 25(2), pages 201-214, March.
  13. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Macro and Microeconomic Integrated Approach to Assessing the Effects of Public Policies," Working Papers 22, ECINEQ, Society for the Study of Economic Inequality.
  14. Nesbakken, Runa, 2001. " Energy Consumption for Space Heating: A Discrete-Continuous Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 165-84, March.
  15. Jose Labeaga & Angel Lopez, 1997. "A study of petrol consumption using Spanish panel data," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 795-802.
  16. Baker, Paul & Blundell, Richard & Micklewright, John, 1989. "Modelling Household Energy Expenditures Using Micro-data," Economic Journal, Royal Economic Society, vol. 99(397), pages 720-38, September.
  17. Gbadebo Oladosu, 2003. "An Almost Ideal Demand System Model of Household Vehicle Fuel Expenditure Allocation in the United States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-21.
  18. Richard Schmalensee & Thomas M. Stoker, 1999. "Household Gasoline Demand in the United States," Econometrica, Econometric Society, vol. 67(3), pages 645-662, May.
  19. Xavier Labandeira & José M. Labeaga, 1999. "Combining input-output analysis and micro-simulation to assess the effects of carbon taxation on Spanish households," Fiscal Studies, Institute for Fiscal Studies, vol. 20(3), pages 305-320, September.
  20. Adonis Yatchew & Joungyeo Angela No, 2001. "Household Gasoline Demand in Canada," Econometrica, Econometric Society, vol. 69(6), pages 1697-1709, November.
  21. Keen, Michael, 1986. "Zero Expenditures and the Estimation of Engel Curves," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 277-86, July.
  22. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  23. Jose M. Labeaga & Angel López, 1994. "Estimation of the welfare effects of indirect tax changes on spanish households: an anlysis of the 1992 vat reform," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 289-311, May.
  24. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
  25. Puller, Steven L. & Greening, Lorna A., 1999. "Household adjustment to gasoline price change: an analysis using 9 years of US survey data," Energy Economics, Elsevier, vol. 21(1), pages 37-52, February.
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