Modeling North America Energy Demand by sectors (Residential-Commercial and Transportation)

Dariush Vafi (MSc.) ()
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Dariush Vafi (MSc.): Faculty Member of Institute for International Energy Studies (IIES).

Iranian Economic Review (IER), 2007, vol. 12, issue 2, 61-72

Abstract: The aggregate model of North America includes residential-commercial and transportation sectors. The residential-commercial sector equation is Constant Elasticity Model (CEM) and in this paper we used it for Almon polynomial distributed lag model. This model gives the long run price elasticity of demand. The price elasticity compete the income elasticity in the sense that moderate increase in energy demand. The real price elasticity of demand is –0.19 while the income elasticity of demand is high considerably estimated as 0.59. Like price elasticity in the transportation sector (with the same method) is -0.1 delineating an inelastic demand to price. Also the income elasticity is rather considerable. Income elasticity in this sector is 0.67 that shows the driving force in energy demand in the North America is the transportation sector. The R&D efforts along with other non-price policies contribute in lower energy demand growth. The coefficient of filter variable to cover the asymmetric response of demand to price changes (as a proxy variable for technology improvement) is estimated as -0.037. Although technology improvements could relax the demand in this sector, but the demand growth still will be considerable.

Keywords: Energy demand; Price Elasticity; Income Elasticity; ALMON METHOD. (search for similar items in EconPapers)
Date: 2007
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