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An Analysis of UK Energy Demand Using Multivariate Cointegration

Author

Listed:
  • Lester C. Hunt

    (Department of Economics, University of Portsmouth)

  • Robert Witt

    (Department of Economics, University of Surrey)

Abstract

In this paper we estimate an aggregate energy demand equation by a maximum likelihood procedure proposed by Johansen (1988) for the UK using annual data from 1967 to 1994. The influence of the price of energy, income and temperature on energy consumption is examined. A unique long-run equilibrium relationship between energy demand, income and price is found to exist for the period, with temperature affecting demand only in the short-run. The resultant estimated elasticities are robust to different specifications and corroborates the findings of Hunt and Manning (1989) although a weaker long-run effect of income on energy demand was observed.

Suggested Citation

  • Lester C. Hunt & Robert Witt, 1995. "An Analysis of UK Energy Demand Using Multivariate Cointegration," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 86, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    • Handle: RePEc:sur:seedps:86
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    File URL: https://repec.som.surrey.ac.uk/seeds/SEEDS86.pdf
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    References listed on IDEAS

    as
    1. Muscatelli, Vito Antonio & Hurn, A Stan, 1992. "Cointegration and Dynamic Time Series Models," Journal of Economic Surveys, Wiley Blackwell, vol. 6(1), pages 1-43.
    2. Colin Hargreaves (ed.), 1992. "Macroeconomic Modelling Of The Long Run," Books, Edward Elgar Publishing, number 207.
    3. Hunt, Lester & Manning, Neil, 1989. "Energy Price- and Income-Elasticities of Demand: Some Estimates for the UK Using the Cointegration Procedure," Scottish Journal of Political Economy, Scottish Economic Society, vol. 36(2), pages 183-193, May.
    4. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lester C. Hunt & Guy Judge & Yasushi Ninomiya, 2003. "Modelling underlying energy demand trends," Chapters, in: Lester C. Hunt (ed.), Energy in a Competitive Market, chapter 9, Edward Elgar Publishing.
    2. repec:ers:journl:v:xv:y:2012:i:sie:p:47-64 is not listed on IDEAS
    3. Erdogdu, Erkan, 2007. "Electricity demand analysis using cointegration and ARIMA modelling: A case study of Turkey," Energy Policy, Elsevier, vol. 35(2), pages 1129-1146, February.
    4. Xavier Labandeira & Baltazar Manzano, 2012. "Some Economic Aspects of Energy Security," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 47-64.
    5. Galindo, Luis Miguel & Samaniego, Joseluis & Ferrer, Jimy & Alatorre, José Eduardo & Reyes, Orlando, 2016. "Cambio climático, políticas públicas y demanda de energía y gasolinas en América Latina: un meta-análisis," Documentos de Proyectos 40841, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Hunt, Lester C. & Ryan, David L., 2015. "Economic modelling of energy services: Rectifying misspecified energy demand functions," Energy Economics, Elsevier, vol. 50(C), pages 273-285.
    7. Luis Miguel Galindo & Jimy Ferrer Carbonell & José Eduardo Alatorre & Orlando Reyes, 2015. "Metaanálisis de las elasticidades ingreso y precio de la demanda de energía: algunas implicaciones de politica pública para América Latina," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 38(75), pages 9-40.
    8. Rendón, Juan F. & Trespalacios, Alfredo & Cortés, Lina M. & Villada-Medina, Hernán D., 2021. "Modelización de la demanda de energía eléctrica: más allá de la normalidad || Electrical energy demand modeling: beyond normality," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 32(1), pages 83-98, December.
    9. Lester C. Hunt & Guy Judge & Yashushi Ninomiya, 2000. "Modelling Technical Progress: An Application of the Stochastic Trend Model to UK Energy Demand," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 99, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.

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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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