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Structural Breaks, Parameter Stability and Energy Demand Modeling in Nigeria

Author

Listed:
  • Olusegun A. Omisakin

    (Department of Economics and Business Studies, Redeemer's University; and Centre for Econometric and Allied Research (CEAR), University of Ibadan, Nigeria)

  • Oluwatosin A. Adeniyi

    (Centre for the Study of the Economies of Africa, Nigeria)

  • Abimbola M. Oyinlola

    (Department of Economics, University of Ibadan, Nigeria)

Abstract

This paper extends previous studies in modeling and estimating energy demand functions for both gasoline and kerosene petroleum products for Nigeria from 1977 to 2008. In contrast to earlier studies on Nigeria and other developing countries, this study specifically tests for the possibility of structural breaks/regime shifts and parameter instability in the energy demand functions using more recent and robust techniques. In addition, the study considers an alternative model specification which primarily captures the price-income interaction effects on both gasoline and kerosene demand functions. While the conventional residual-based cointegration tests employed fail to identify any meaningful long run relationship in both functions, the Gregory-Hansen structural break cointegration approach confirms the cointegration relationships despite the breakpoints. Both functions are also found to be stable under the period studied. The elasticity estimates also follow the a priori expectation being inelastic both in the long- and short run for the two functions.

Suggested Citation

  • Olusegun A. Omisakin & Oluwatosin A. Adeniyi & Abimbola M. Oyinlola, 2012. "Structural Breaks, Parameter Stability and Energy Demand Modeling in Nigeria," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 5(2), pages 129-144, August.
    • Handle: RePEc:tei:journl:v:5:y:2012:i:2:p:129-144
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    References listed on IDEAS

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    Cited by:

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    3. Olusegun A. Omisakin & Oluwatosin A. Adeniyi, 2014. "Structural Breaks and Finance-Driven Growth Hypothesis in ECOWAS: Further Empirical Evidence," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(3), pages 63-80, December.

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    More about this item

    Keywords

    Energy demand modeling; structural breaks; parameter stability; cointegration;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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