An Estimation of Residential Water Demand Using Co-integration and Error Correction Techniques

Roberto Martinez-Espineira ()

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Abstract: The purpose of this paper is to measure the short- and long-run effect ofthe price of water on residential water use. Unit root tests reveal that water use series and series of other variables affecting use are non-stationary. However, a long-run co-integrating relationship is found in the demand model, which makes possible to obtain a partial correction term and to estimate an error correction model. The empirical application uses monthly time-series observations from Seville (Spain). The price-elasticity of demand is estimated as around -0.1 in the short run and -0.5 in the long run. These results are robust to the use of different specifications.

Keywords: seasonal unit roots; residential water demand; price elasticity; time-series; co-integration; Error Correction Model. (search for similar items in EconPapers)
JEL-codes: C22 D12 Q25 (search for similar items in EconPapers)
Date: 2004-10-03
Note: Type of Document - pdf; pages: 47
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http://129.3.20.41/eps/othr/papers/0410/0410002.pdf (application/pdf)

Related works:
Working Paper: An Estimation of Residential Water Demand Using Co-Integration and Error Correction Techniques (2006)
Journal Article: An estimation of residential water demand using co-integration and error correction tec hniques (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpot:0410002

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