IDEAS home Printed from https://ideas.repec.org/p/anu/wpieep/0104.html
   My bibliography  Save this paper

Residential energy demand in Australia: an application of dynamic OLS

Author

Listed:
  • Muhammad Akmal

    (Department of Economics, Australian National University)

  • David I. Stern

    (Centre for Resource and Environmental Studies, Australian National University)

Abstract

This paper reports estimates of the long-run elasticities of residential demand for electricity, natural gas and other fuels for Australia. The dynamic OLS (DOLS) framework is used to estimate logarithmic demand equations with previously unpublished national-level quarterly data. Significant substitution possibilities are found between electricity and gas and between electricity and other fuels. However, the cross-price elasticity of gas with respect to the price of residual fuels is negative. Our results are similar to other Australian and North American estimates but are more theoretically consistent than previous Australian estimates. We confirm that Australian residential energy demand is much more price responsive than North American residential energy demand.

Suggested Citation

  • Muhammad Akmal & David I. Stern, 2001. "Residential energy demand in Australia: an application of dynamic OLS," Working Papers in Ecological Economics 0104, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
    • Handle: RePEc:anu:wpieep:0104
    as

    Download full text from publisher

    File URL: http://een.anu.edu.au/download_files/eep0104.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Donnelly, W. A. & Diesendorf, M., 1985. "Variable elasticity models for electricity demand," Energy Economics, Elsevier, vol. 7(3), pages 159-162, July.
    2. Bartels, R. & Fiebig, D., 1990. "Integrating Direct Metering and Conditional Demand Analysis for Estimating End-Use Loads," Other publications TiSEM eeac5253-bbf9-4ae2-bf14-e, Tilburg University, School of Economics and Management.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    5. Rushdi, Ali Ahmed, 1986. "Interfuel substitution in the residential sector of South Australia," Energy Economics, Elsevier, vol. 8(3), pages 177-185, July.
    6. David L. Ryan & Yu Wang & Andre Plourde, 1996. "Asymmetric Price Responses of Residential Energy Demand in Ontario," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 317-323, April.
    7. Bauwens, Luc & Fiebig, Denzil G & Steel, Mark F J, 1994. "Estimating End-Use Demand: A Bayesian Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(2), pages 221-231, April.
    8. Dumagan, Jesus C. & Mount, Timothy D., 1993. "Welfare effects of improving end-use efficiency: Theory and application to residential electricity demand," Resource and Energy Economics, Elsevier, vol. 15(2), pages 175-201, June.
    9. Robert Bartels & Denzil G. Fiebig, 1990. "Integrating Direct Metering and Conditional Demand Analysis for Estimating End-Use Loads," The Energy Journal, , vol. 11(4), pages 79-98, October.
    10. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    11. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    12. Donnelly, W A & Saddler, H D W, 1984. "The Retail Demand for Electricity in Tasmania," Australian Economic Papers, Wiley Blackwell, vol. 23(42), pages 52-60, June.
    13. Robert Bartels & Denzil G. Fiebig, 2000. "Residential End-Use Electricity Demand: Results from a Designed Experiment," The Energy Journal, , vol. 21(2), pages 51-81, April.
    14. repec:bla:ecorec:v:72:y:1996:i:219:p:319-31 is not listed on IDEAS
    15. Goldschmidt, Peter, 1988. "Domestic appliance energy usage in Western Australia," Energy Economics, Elsevier, vol. 10(2), pages 155-162, April.
    16. 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.
    17. W. A. Donnelly, 1984. "Residential Electricity Demand Modeling in the Australian Capital Territory: Preliminary Results," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 119-132.
    18. Fiebig, Denzil G. & Bartels, Robert & Aigner, Dennis J., 1991. "A random coefficient approach to the estimation of residential end-use load profiles," Journal of Econometrics, Elsevier, vol. 50(3), pages 297-327, December.
    19. repec:bla:ecorec:v:51:y:1975:i:133:p:1-18 is not listed on IDEAS
    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. Chandan Sharma & N.R. Bhanumurthy, 2011. "Estimating Infrastructural Investment Needs for India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 5(2), pages 221-243, May.
    2. Md. Shahiduzzaman & Khorshed Alam, 2014. "A reassessment of energy and GDP relationship: the case of Australia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(2), pages 323-344, April.
    3. Narayan, Paresh Kumar & Smyth, Russell, 2005. "The residential demand for electricity in Australia: an application of the bounds testing approach to cointegration," Energy Policy, Elsevier, vol. 33(4), pages 467-474, March.
    4. Bohlmann, Jessika Andreina & Inglesi-Lotz, Roula, 2018. "Analysing the South African residential sector's energy profile," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 240-252.
    5. Gulshan Maqbool & Zulqarnain Haider, 2021. "The Impact of Individual Behavior on Household Energy Saving," Journal of Economic Impact, Science Impact Publishers, vol. 3(1), pages 39-46.
    6. Nababan, Tongam Sihol & Simanjuntak, Juara, 2008. "Aplikasi Willingness To Pay Sebagai Proksi Terhadap Variabel Harga: Suatu Model Empirik Dalam Estimasi Permintaan Energi Listrik Rumah Tangga [The Application of Willingness To Pay As A Proxy To Va," MPRA Paper 49155, University Library of Munich, Germany.
    7. repec:bla:opecrv:v:33:y:2009:i:1:p:70-96 is not listed on IDEAS

    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. Muhammad, Akmal, 2002. "The structure of consumer energy demand in Australia: an application of a dynamic almost ideal demand system," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 125050, Australian Agricultural and Resource Economics Society.
    2. Muhammad Akmal & David I. Stern, 2001. "The structure of Australian residential energy demand," Working Papers in Ecological Economics 0101, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
    3. Narayan, Paresh Kumar & Smyth, Russell, 2005. "The residential demand for electricity in Australia: an application of the bounds testing approach to cointegration," Energy Policy, Elsevier, vol. 33(4), pages 467-474, March.
    4. Papineau, Maya & Yassin, Kareman & Newsham, Guy & Brice, Sarah, 2021. "Conditional demand analysis as a tool to evaluate energy policy options on the path to grid decarbonization," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    5. Larsen, Bodil Merethe & Nesbakken, Runa, 2004. "Household electricity end-use consumption: results from econometric and engineering models," Energy Economics, Elsevier, vol. 26(2), pages 179-200, March.
    6. Hanne Marit Dalen and Bodil M. Larsen, 2015. "Residential End-use Electricity Demand: Development over Time," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    7. Mattias Vesterberg and Chandra Kiran B. Krishnamurthy, 2016. "Residential End-use Electricity Demand: Implications for Real Time Pricing in Sweden," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    8. Swan, Lukas G. & Ugursal, V. Ismet, 2009. "Modeling of end-use energy consumption in the residential sector: A review of modeling techniques," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(8), pages 1819-1835, October.
    9. Mattias Vesterberg & Chandra Kiran B. Krishnamurthy, 2016. "Residential End-use Electricity Demand: Implications for Real Time Pricing in Sweden," The Energy Journal, , vol. 37(4), pages 141-164, October.
    10. Hanne Marit Dalen & Bodil M. Larsen, 2013. "Residential end-use electricity demand. Development over time," Discussion Papers 736, Statistics Norway, Research Department.
    11. Bartels, Robert & Fiebig, Denzil G., 1995. "Optimal design in end-use metering experiments," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 39(3), pages 305-309.
    12. Ye, Yonggang & Chang, Tsangyao & Hung, Ken & Lu, Yang-Cheng, 2011. "Revisiting rational bubbles in the G-7 stock markets using the Fourier unit root test and the nonparametric rank test for cointegration," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 82(2), pages 346-357.
    13. Robert Bartels & Denzil G. Fiebig & Daehoon Nahm, 1996. "Regional End‐Use Gas Demand in Australia," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 319-331, December.
    14. Bodil M. Larsen & Runa Nesbakken, 2003. "How to quantify household electricity end-use consumption," Discussion Papers 346, Statistics Norway, Research Department.
    15. Mohammad Razib Hossain, 2021. "Inward foreign direct investment in Bangladesh: Do we need to rethink about some of the macro-level quantitative determinants?," SN Business & Economics, Springer, vol. 1(3), pages 1-23, March.
    16. Tang, Chor Foon & Tan, Eu Chye, 2015. "Does tourism effectively stimulate Malaysia's economic growth?," Tourism Management, Elsevier, vol. 46(C), pages 158-163.
    17. Carlos Esteban Posada P. & Martha Misas A, 1995. "La tasa de interés en Colombia: 1958-1992," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 14(27), pages 63-94, June.
    18. Bunzel, Helle, 2006. "FIXED-b ASYMPTOTICS IN SINGLE-EQUATION COINTEGRATION MODELS WITH ENDOGENOUS REGRESSORS," Econometric Theory, Cambridge University Press, vol. 22(4), pages 743-755, August.
    19. Anderson, Richard G. & Hoffman, Dennis L. & Rasche, Robert H., 2002. "A vector error-correction forecasting model of the US economy," Journal of Macroeconomics, Elsevier, vol. 24(4), pages 569-598, December.
    20. Takashi Miyazaki & Shigeyuki Hamori, 2014. "Cointegration with Regime Shift between Gold and Financial Variables," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(4), pages 90-97, October.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:anu:wpieep:0104. 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: Jack Pezzey (email available below). General contact details of provider: http://incres.anu.edu.au/EEP/wp.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.