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Short run and long run dynamics of residential electricity consumption: Homogeneous and heterogeneous panel estimations for OECD

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  • Bilgili, Faik
  • Pamuk, Yalçın
  • Halıcı Tülüce, Nadide Sevil

Abstract

The purpose of this paper is to reveal the short run and long run dynamics of residential electricity consumption for 11 OECD countries within annual period 1979-2006. To this end, this paper first explores the findings from related literature evidence and, later, follows panel cointegration equations (CEs) and panel error correction models (ECMs). CEs give long run relations of the variables in residential electricity demand function. ECMs include both long run and short run parameter estimates of the per capita residential electricity demand in terms of residential electricity price, residential light fuel oil price, residential natural gas price and per capita income. For both ECs and ECMs, the techniques of panel OLS, panel adjusted OLS and panel dynamic OLS are utilized. Finally, this paper yields short term and long term elasticities of residential electricity consumption together with error correction terms through homogeneous and heterogeneous variance structures.

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File URL: https://mpra.ub.uni-muenchen.de/33291/1/MPRA_paper_33291.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33291.

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Date of creation: Nov 2010
Date of revision: Jun 2011
Publication status: Published in Economic Computation and Economic Cybernetics Studies and Research 3/2011 (2011): pp. 113-126
Handle: RePEc:pra:mprapa:33291
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Keywords: electricity consumption; elasticities; homogeneous and heterogeneous variance structures; panel error correction model; panel dynamic ordinary least squares;

Find related papers by JEL classification:

  • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
  • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
  • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
  • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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  1. Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
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  4. Narayan, Paresh Kumar & Smyth, Russell & Prasad, Arti, 2007. "Electricity consumption in G7 countries: A panel cointegration analysis of residential demand elasticities," Energy Policy, Elsevier, vol. 35(9), pages 4485-4494, September.
  5. Nakajima, Tadahiro & Hamori, Shigeyuki, 2010. "Change in consumer sensitivity to electricity prices in response to retail deregulation: A panel empirical analysis of the residential demand for electricity in the United States," Energy Policy, Elsevier, vol. 38(5), pages 2470-2476, May.
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  7. Hondroyiannis, George, 2004. "Estimating residential demand for electricity in Greece," Energy Economics, Elsevier, vol. 26(3), pages 319-334, May.
  8. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
  9. Peter Pedroni, 2004. "Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis," Department of Economics Working Papers 2004-15, Department of Economics, Williams College.
  10. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
  11. Dergiades, Theologos & Tsoulfidis, Lefteris, 2008. "Estimating residential demand for electricity in the United States, 1965-2006," Energy Economics, Elsevier, vol. 30(5), pages 2722-2730, September.
  12. Wasantha Athukorala & Clevo Wilson, 2010. "Estimating short and long-term residential demand for electricity: New evidence from Sri Lanka," School of Economics and Finance Discussion Papers and Working Papers Series 254, School of Economics and Finance, Queensland University of Technology.
  13. Filippini, Massimo & Pachauri, Shonali, 2004. "Elasticities of electricity demand in urban Indian households," Energy Policy, Elsevier, vol. 32(3), pages 429-436, February.
  14. Peter Pedroni, 2001. "Purchasing Power Parity Tests in Cointegrated Panels," Department of Economics Working Papers 2001-01, Department of Economics, Williams College.
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Cited by:

  1. Wang, Zhaohua & Lu, Milin & Wang, Jian-Cai, 2014. "Direct rebound effect on urban residential electricity use: An empirical study in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 124-132.

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