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The Demand for Electricity in Kuwait: A Cointegration Analysis

Author

Listed:
  • Osama Alfalah

    (Economics and Finance, Gulf University for Science and Technology, West Mishref, Kuwait,)

  • Lama Alhumaidan

    (Department of Economics Public Authority for Applied Education and Training, Kuwait City, Kuwait)

  • Deniz Baglan

    (Department of Economics, Howard University, 2400 Sixth Street, N.W. Washington, DC, 20059, USA)

Abstract

In this paper, we investigate the determinants of electricity demand in Kuwait and evaluate their impact on electricity consumption. In order to do this, we use the standard demand equation, cointegration techniques, and the error correction model on annual time series data for Kuwait from 1972 to 2017. One of the important features of our contribution is that it covers the most recently available data, in which we use the longest annual period (45 years) compared to all other studies of electricity demand in the region. We find that income elasticity for Kuwaiti consumers is insignificant both in short-run and the long run. This indicates that income has no impact on the consumption of electricity in Kuwait. Additionally, the short-run price elasticity is -0.22 while the long-run is -1.22, suggesting a negative yet elastic relationship between the electricity price in Kuwait and the demand in the long-run, while the short-run is inelastic.

Suggested Citation

  • Osama Alfalah & Lama Alhumaidan & Deniz Baglan, 2020. "The Demand for Electricity in Kuwait: A Cointegration Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 9-13.
    • Handle: RePEc:eco:journ2:2020-06-2
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    References listed on IDEAS

    as
    1. Al-Faris, Abdul Razak F., 2002. "The demand for electricity in the GCC countries," Energy Policy, Elsevier, vol. 30(2), pages 117-124, January.
    2. M. Nagy Eltony & Mohammad A. Al‐Awadhi, 2007. "Residential energy demand: a case study of Kuwait," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 31(3), pages 159-168, September.
    3. BuShehri, Mahmoud A.M. & Wohlgenant, Michael K., 2012. "Measuring the welfare effects of reducing a subsidy on a commodity using micro-models: An application to Kuwait's residential demand for electricity," Energy Economics, Elsevier, vol. 34(2), pages 419-425.
    4. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    5. Atalla, Tarek N. & Hunt, Lester C., 2016. "Modelling residential electricity demand in the GCC countries," Energy Economics, Elsevier, vol. 59(C), pages 149-158.
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    Cited by:

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    2. Daniel Morais de Souza & Rogerio Silva de Mattos & Alexandre Zanini, 2022. "Estimating Elasticities for the Residential Demand of Electricity in Brazil Using Cointegration Models," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 315-324, March.

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    More about this item

    Keywords

    electricity demand; structural time series model; cointegration.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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