THE DEMAND FOR ELECTRICITY AND NATURAL GAS IN THE NORTHEASTERN UNITED STATES

Tej Gautam and Krishna Paudel

No 230114, 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas from Southern Agricultural Economics Association

Abstract: This paper examines the demand for natural gas and electricity in residential, commercial and industrial sectors of the Northeastern United States comprising seven states using annual state-level panel data over the period between 1997and 2011. It applies panel unit root and cointegration tests and then estimates the parameters using four alternative estimators: dynamic fixed effect (DFE), mean group (MG), pooled mean group (PMG) and Common correlated effect mean group (CCEMG). PMG showed better performance compared to estimators obtained from other three models. The panel unit root and cointegration tests show that the series are I (1) and variables are cointegrated. The estimated results show that long-run price elasticity for natural gas in residential, commercial and industrial sectors are -0.05, -0.96 and -0.20; and for electricity they are -0.11, 0.10 and -2.07 respectively. The corresponding long-run income elasticities are 3.05, 0.86, & 0.07 for natural gas and 0.93, 0.53 and 0.18 for electricity, respectively. The cooling degree days (CDD) and heating degree days (HDD) have positive effects on demand for electricity and natural gas in all but not for electricity in industrial sector.

Keywords: Consumer/Household Economics; Research Methods/ Statistical Methods; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 30
Date: 2016
New Economics Papers: this item is included in nep-ene and nep-pke
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea16:230114

DOI: 10.22004/ag.econ.230114

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