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A Panel Data Analysis of the Demand for Total Energy and Electricity in OECD Countries

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  • Chien-Chiang Lee
  • Jun-De Lee

Abstract

This paper applies panel unit root, panel cointegration, and panel causality techniques to re-examine the total energy and electricity demand functions of 25 selected OECD countries during the 1978-2004 period. The panel results indicate that total energy demand is income inelastic and price inelastic, whereas electricity demand is income elastic and price inelastic. Based on the results of the panel causality test, there are reciprocal causal relationships among real income, real energy price, and total energy consumption. Furthermore, a uni-directional causality runs from income and electricity price to electricity consumption. The results for the panel as a whole suggest that the demand for total energy and electricity in the OECD countries is driven largely by strong economic growth, while consumers are largely insensitive to price changes.

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  • Chien-Chiang Lee & Jun-De Lee, 2010. "A Panel Data Analysis of the Demand for Total Energy and Electricity in OECD Countries," The Energy Journal, , vol. 31(1), pages 1-24, January.
    • Handle: RePEc:sae:enejou:v:31:y:2010:i:1:p:1-24
    DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No1-1
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    References listed on IDEAS

    as
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    7. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    8. Peter Pedroni, 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(S1), pages 653-670, November.
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    More about this item

    Keywords

    Electricity; Elasticity; Energy demand function; Energy price; Income; panel cointegration;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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