Residential energy demand in Australia: an application of dynamic OLS

Muhammad Akmal and David I. Stern ()
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Muhammad Akmal: Department of Economics, Australian National University

Working Papers in Ecological Economics from Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program

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 The dynamic OLS (DOLS) framework is used to estimate logarithmic demand equations with previously unpublished national-level quarterly data.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.

New Economics Papers: this item is included in nep-mic
Date: Written 2001-10
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