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

John Cuddington and Leila Dagher ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: SR elasticity; LR elasticity; demand function; ADL (search for similar items in EconPapers)
JEL-codes: C13 C51 Q41 (search for similar items in EconPapers)
Date: 2013
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https://mpra.ub.uni-muenchen.de/116122/1/MPRA_paper_116122.pdf original version (application/pdf)

Related works:
Journal Article: Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications (2015) Downloads
Journal Article: Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:116122

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