Estimating energy demand elasticities for gas exporting countries: a dynamic panel data approach

Eshagh Mansourkiaee ()
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Eshagh Mansourkiaee: NIOC (Economic Assessment and Research Department)

SN Business & Economics, 2023, vol. 3, issue 1, 1-28

Abstract: Abstract This paper estimates the price and GDP/income elasticities of residential sector gas demand in the number of gas exporting countries over 1990–2019 by applying the homogenous OLS, TSLS and GMM methods to a panel data set. The energy demand is specified by a simple partial adjustment model. The study finds that gas exporting countries are nonresponsive to price changes either in a short or long-term period. Although the results for income elasticity are not conclusive in terms of magnitude and sign, they show that short-run income elasticity is inelastic and smaller than that of long-run. The study also provides results of heterogeneous 2SLS estimators for individual countries. Comparing these results with the results of the previous similar study using the ARDL bounds testing approach shows that while there is wide variability between individual estimations, both studies have found almost similar long-run income elasticity on average. For the long-run price elasticity, however, the ARDL model seems to give more intuitive results in terms of sign and magnitude.

Keywords: Residential sector; Gas demand; Price elasticity; Income elasticity; Gas exporting; Panel data (search for similar items in EconPapers)
JEL-codes: C30 C33 R2 R21 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43546-022-00373-5

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