Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications

John Cuddington and Leila Dagher ()

The Energy Journal, 2015, vol. 36, issue 1, 185-210

Abstract: Many empirical exercises estimating demand functions, whether in energy economics or other fields, are concerned with estimating dynamic effects of price and income changes over time. This paper first reviews a number of commonly used dynamic demand specifications to highlight the implausible a priori restrictions that they place on short and long-run elasticities. Such problems are easily avoided by adopting a general-to-specific modeling methodology. Second, it discusses functional forms and estimation issues for getting point estimates and associated standard errors for both short and long-run elasticities—key information that is missing from many published studies. Third, our proposed approach is illustrated using a dataset on Minnesota residential electricity demand.

Date: 2015
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https://journals.sagepub.com/doi/10.5547/01956574.36.1.7 (text/html)

Related works:
Journal Article: Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications (2015)
Working Paper: Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:36:y:2015:i:1:p:185-210

DOI: 10.5547/01956574.36.1.7

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