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The price and income elasticities of natural gas demand: International evidence

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  • Paul J Burke
  • Hewen Yang

Abstract

Natural gas contributes a growing share of the world's energy mix. In this paper we use national-level data for a sample of 44 countries to estimate the price and income elasticities of natural gas demand. We present both single-equation results and results instrumenting natural gas prices with proved natural gas reserves. Our instrument includes both domestic reserves and distance-weighted reserves in other countries. We obtain estimates of the average long-run price elasticity of natural gas demand of around -1.25 and of the average long-run income elasticity of natural gas demand of +1 and higher. We also present separate estimates for final natural gas demand by industry and households.

Suggested Citation

  • Paul J Burke & Hewen Yang, 2016. "The price and income elasticities of natural gas demand: International evidence," Departmental Working Papers 2016-14, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2016-14
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    More about this item

    Keywords

    natural gas; price; income; elasticity; demand;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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