IDEAS home Printed from https://ideas.repec.org/a/lje/journl/v15y2010ispp75-106.html
   My bibliography  Save this article

A Panel Data Analysis of Electricity Demand in Pakistan

Author

Listed:
  • Azam Chaudhry

    (Lahore School of Economics, Pakistan.)

Abstract

This paper looks at the economy-wide demand and the firm level demand for electricity in Pakistan. The economy wide estimation of electricity demand uses panel data from 63 countries from 1998-2008, and finds that the elasticity of demand for electricity with respect to per capita income is approximately 0.69, which implies that a 1% increase in per capita income will lead to a 0.69% increase in the demand for electricity. The firm level analysis uses firm level data from the World Bank’s Enterprise Survey for Pakistan and finds that the price elasticity of demand for electricity across all firms is approximately -0.57, which implies that a 1% increase in electricity prices will lead to a 0.57% decrease in electricity demand across firms. Across sectors, the textile sector has the highest price elasticity of demand (-0.81) while the price elasticity of demand for firms in the electricity and electronics sector is the smallest (-0.31). Finally, firm level data is also used to estimate production functions in order to estimate the impact of electricity shortages on manufacturing output.

Suggested Citation

  • Azam Chaudhry, 2010. "A Panel Data Analysis of Electricity Demand in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(Special E), pages 75-106, September.
    • Handle: RePEc:lje:journl:v:15:y:2010:i:sp:p:75-106
    as

    Download full text from publisher

    File URL: http://121.52.153.179/JOURNAL/LJE%2015,%20SE/05%20Dr%20Azam%20Chaudhry%20EDITED%5B1%5D%2011-10-10.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John Dimitropoulos & Lester Hunt & Guy Judge, 2005. "Estimating underlying energy demand trends using UK annual data," Applied Economics Letters, Taylor & Francis Journals, vol. 12(4), pages 239-244.
    2. Muhammad Arshad Khan & Usman Ahmad, 2008. "Energy Demand in Pakistan: A Disaggregate Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 437-455.
    3. Bjorner, Thomas Bue & Togeby, Mikael & Jensen, Henrik Holm, 2001. "Industrial companies' demand for electricity: evidence from a micropanel," Energy Economics, Elsevier, vol. 23(5), pages 595-617, September.
    4. Urga, Giovanni & Walters, Chris, 2003. "Dynamic translog and linear logit models: a factor demand analysis of interfuel substitution in US industrial energy demand," Energy Economics, Elsevier, vol. 25(1), pages 1-21, January.
    5. Masayasu Ishguro & Takamasa Akiyama, 1995. "Electricity demand in Asia and the effects on energy supply and the investment environment," Policy Research Working Paper Series 1557, The World Bank.
    6. Alan D. Woodland, 1993. "A Micro-Econometric Analysis of the Industrial Demand for Energy in NSW," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 57-90.
    7. Lall, Somik V. & Mengistae, Taye, 2005. "The impact of business environment and economic geography on plant-level productivity : an analysis of Indian industry," Policy Research Working Paper Series 3664, The World Bank.
    8. Yair Mundlak, 1961. "Empirical Production Function Free of Management Bias," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 43(1), pages 44-56.
    9. Benjamin Bental & S. Abraham Ravid, 1982. "A Simple Method for Evaluating the Marginal Cost of Unsupplied Electricity," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 249-253, Spring.
    10. Bhattacharyya, Subhes C. & Timilsina, Govinda R., 2009. "Energy demand models for policy formulation : a comparative study of energy demand models," Policy Research Working Paper Series 4866, The World Bank.
    11. Aygul Ozbafli & Glenn Jenkins & Roop Jyoti, 2006. "The Opportunity Cost Of Electricity Outages And Privatization Of Substations In Nepal," Working Paper 1066, Economics Department, Queen's University.
    12. Aguirregabiria, Victor, 2009. "Econometric Issues and Methods in the Estimation of Production Functions," MPRA Paper 15973, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:sae:sagope:v:11:y:2021:i:4:p:21582440211060829 is not listed on IDEAS
    2. Muhammad Kamran Khan & Muhammad Imran Khan & Muhammad Rehan, 2020. "The relationship between energy consumption, economic growth and carbon dioxide emissions in Pakistan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-13, December.
    3. Rafat Mahmood & Sundus Saleemi & Sajid Amin, 2016. "Impact of Climate Change on Electricity Demand: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(1), pages 29-47.
    4. Mubashir Qasim & Koji Kotani, 2014. "An empirical analysis of energy shortage in Pakistan," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(1), pages 137-166, June.
    5. Abdul Rehman & Hengyun Ma & Munir Ahmad & Abdul Rauf, 2023. "Investigating the Dynamic Association Among CO2 Emission, Energy Use, and Economic Growth: Evidence From China," SAGE Open, , vol. 13(3), pages 21582440211, July.
    6. Shakeel, Shah Rukh & Takala, Josu & Shakeel, Waqas, 2016. "Renewable energy sources in power generation in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 421-434.
    7. Mirza, Faisal Mehmood & Kanwal, Afra, 2017. "Energy consumption, carbon emissions and economic growth in Pakistan: Dynamic causality analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 1233-1240.
    8. Zaman Sajid & Asma Javaid, 2018. "A Stochastic Approach to Energy Policy and Management: A Case Study of the Pakistan Energy Crisis," Energies, MDPI, vol. 11(9), pages 1-18, September.
    9. Alanda Venter & Roula Inglesi-Lotz, 2021. "Does institutional quality affect electricity supply? A panel SUR estimation," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2021(2), pages 77-99.
    10. Mariam Amjad & Maria Aslam & Madiha Noshad, 2020. "Pakistan Energy Crises: Determinants and Consequences," iRASD Journal of Energy and Environment, International Research Association for Sustainable Development (iRASD), vol. 1(2), pages 94-107, December.
    11. Noel Alter & Shabib Haider Syed, 2011. "An Empirical Analysis of Electricity Demand in Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 1(4), pages 116-139.
    12. Sana Bashir & Iftikhar Ahmad & Sajid Rashid Ahmad, 2018. "Low-Emission Modeling for Energy Demand in the Household Sector: A Study of Pakistan as a Developing Economy," Sustainability, MDPI, vol. 10(11), pages 1-17, October.
    13. Nazish Tehseen & Sheraz Ali Khan, 2017. "Fuel Demand Elasticities for Energy and Environmental Policies: Evidence from Household Data in Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 6(3), pages 117-129, September.
    14. Qudrat-Ullah, Hassan, 2015. "Independent power (or pollution) producers? Electricity reforms and IPPs in Pakistan," Energy, Elsevier, vol. 83(C), pages 240-251.
    15. Hui Zhu, 2023. "Oil Demand Forecasting in Importing and Exporting Countries: AI-Based Analysis of Endogenous and Exogenous Factors," Sustainability, MDPI, vol. 15(18), pages 1-19, September.
    16. Khan, Rana Asad Javid & Thaheem, Muhammad Jamaluddin & Ali, Tauha Hussain, 2020. "Are Pakistani homebuyers ready to adopt sustainable housing? An insight into their willingness to pay," Energy Policy, Elsevier, vol. 143(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jevgenijs Steinbuks, 2012. "Interfuel Substitution and Energy Use in the U.K. Manufacturing Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    2. Fowlie, Meredith & Perloff, Jeffrey M., 2004. "The Effect of Pollution Permit Allocations on Firm-Level Emissions," CUDARE Working Papers 25116, University of California, Berkeley, Department of Agricultural and Resource Economics.
    3. Syed Aziz Ur Rehman & Yanpeng Cai & Rizwan Fazal & Gordhan Das Walasai & Nayyar Hussain Mirjat, 2017. "An Integrated Modeling Approach for Forecasting Long-Term Energy Demand in Pakistan," Energies, MDPI, vol. 10(11), pages 1-23, November.
    4. Henriksson, Eva & Söderholm, Patrik & Wårell, Linda, 2012. "Industrial electricity demand and energy efficiency policy: The role of price changes and private R&D in the Swedish pulp and paper industry," Energy Policy, Elsevier, vol. 47(C), pages 437-446.
    5. Lutz, Benjamin Johannes & Massier, Philipp & Sommerfeld, Katrin & Löschel, Andreas, 2017. "Drivers of energy efficiency in German manufacturing: A firm-level stochastic frontier analysis," ZEW Discussion Papers 17-068, ZEW - Leibniz Centre for European Economic Research.
    6. Arnberg, Soren & Bjorner, Thomas Bue, 2007. "Substitution between energy, capital and labour within industrial companies: A micro panel data analysis," Resource and Energy Economics, Elsevier, vol. 29(2), pages 122-136, May.
    7. Chattopadhyay, Pradip, 2004. "Cross-subsidy in electricity tariffs: evidence from India," Energy Policy, Elsevier, vol. 32(5), pages 673-684, March.
    8. Bjorner, Thomas Bue & Jensen, Henrik Holm, 2002. "Energy taxes, voluntary agreements and investment subsidies--a micro-panel analysis of the effect on Danish industrial companies' energy demand," Resource and Energy Economics, Elsevier, vol. 24(3), pages 229-249, June.
    9. Bashmakov, Igor, 2007. "Three laws of energy transitions," Energy Policy, Elsevier, vol. 35(7), pages 3583-3594, July.
    10. Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2012. "Estimation of elasticity price of electricity with incomplete information," Energy Economics, Elsevier, vol. 34(3), pages 627-633.
    11. Roman Fossati & Heiko Rachinger, 2021. "Total Factor Productivity: Exploring firms’ dynamics and heterogeneity over the business cycle," Asociación Argentina de Economía Política: Working Papers 4471, Asociación Argentina de Economía Política.
    12. Steinbuks, Jevgenijs & Neuhoff, Karsten, 2014. "Assessing energy price induced improvements in efficiency of capital in OECD manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 340-356.
    13. Ouedraogo, Nadia S., 2017. "Africa energy future: Alternative scenarios and their implications for sustainable development strategies," Energy Policy, Elsevier, vol. 106(C), pages 457-471.
    14. Bardazzi, Rossella & Oropallo, Filippo & Pazienza, Maria Grazia, 2015. "Do manufacturing firms react to energy prices? Evidence from Italy," Energy Economics, Elsevier, vol. 49(C), pages 168-181.
    15. Lijesen, Mark G., 2007. "The real-time price elasticity of electricity," Energy Economics, Elsevier, vol. 29(2), pages 249-258, March.
    16. Javid, Muhammad & Khan, Farzana Naheed & Arif, Umaima, 2022. "Income and price elasticities of natural gas demand in Pakistan: A disaggregated analysis," Energy Economics, Elsevier, vol. 113(C).
    17. Banda, Benjamin M. & Hassan, Rashid M., 2011. "Inter-fuel substitution and dynamic adjustment in input demand: Implications for deforestation and carbon emission in Malawi," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 6(1), pages 1-16, March.
    18. Kurt Kratena & Michael Wüger, 2003. "The Role of Technology in Interfuel Substitution: A Combined Cross-Section and Time Series Approach," WIFO Working Papers 204, WIFO.
    19. Agnolucci, Paolo & De Lipsis, Vincenzo & Arvanitopoulos, Theodoros, 2017. "Modelling UK sub-sector industrial energy demand," Energy Economics, Elsevier, vol. 67(C), pages 366-374.
    20. Khan, Muhammad Arshad, 2015. "Modelling and forecasting the demand for natural gas in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 1145-1159.

    More about this item

    Keywords

    Electricity; demand; industrial; price elasticity; Pakistan.;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lje:journl:v:15:y:2010:i:sp:p:75-106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shahid Salahuddin (email available below). General contact details of provider: https://edirc.repec.org/data/lsecopk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.