The residential demand for electricity in Australia: an application of the bounds testing approach to cointegration

PK Narayan, R Smyth - Energy policy, 2005 - Elsevier
Energy policy, 2005Elsevier
This paper reports estimates of the long-and short-run elasticities of residential demand for
electricity in Australia using the bounds testing procedure to cointegration, within an
autoregressive distributive lag framework. In the long run, we find that income and own price
are the most important determinants of residential electricity demand, while temperature is
significant some of the time and gas prices are insignificant. Our estimates of long-run
income elasticity and price elasticity of demand are consistent with previous studies …
This paper reports estimates of the long- and short-run elasticities of residential demand for electricity in Australia using the bounds testing procedure to cointegration, within an autoregressive distributive lag framework. In the long run, we find that income and own price are the most important determinants of residential electricity demand, while temperature is significant some of the time and gas prices are insignificant. Our estimates of long-run income elasticity and price elasticity of demand are consistent with previous studies, although they are towards the lower end of existing estimates. As expected, the short-run elasticities are much smaller than the long-run elasticities, and the coefficients on the error-correction coefficients are small consistent with the fact that in the short-run energy appliances are fixed.
Elsevier
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