Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data

Miller, Mark; Alberini, Anna

doi:10.1016/j.enpol.2016.07.031

Cited by 96 publications

(31 citation statements)

References 48 publications

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“…Extra instrumental variables are necessary if the explanatory variables, price, and value-added are endogenous with the dependent variable, as cited by Miller and Alberini [32]. The aggregate energy-price index depends on the amount of each energy product that industry consumes and thus is endogenous with energy consumption.…”

Section: Model Specificationmentioning

confidence: 99%

Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries

Chang¹,

Kang

Jung

2019

Sustainability

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The price and output elasticities of energy demand continue to be of interest to academia and policy institutions, having been estimated in previous studies. However, the estimated results show some inconsistencies, especially at the sectoral level, across countries. Based on our conjecture that those inconsistencies are mainly due to the effect of contingent energy intensities and partially to different units of analysis, we narrowed the analysis to the industry level and classified 16 industries into energy-intensive and less energy-intensive groups. The effects of price and output on energy demand were then compared between these two groups using 274 industry panel data across 20 Organization for Economic Cooperation and Development (OECD) countries from 1978 to 2013. The results showed that the price elasticity of energy demand was consistently lower in the energy-intensive group than in the less energy-intensive group, whereas the output elasticity of energy demand was higher in the energy-intensive group than in the less energy-intensive group. Using panel differences and system generalized method of moments estimations, the dynamic elasticities of energy demand were also estimated. Energy demand in reaction to both price and output changes appeared to be more elastic in the long term than in the short term for both energy-intensive and less energy-intensive groups. These findings could be a useful reference for policy makers to deploy separate energy policies for different industries aiming for different temporal effects.

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Section: Model Specificationmentioning

confidence: 99%

Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries

Chang¹,

Kang

Jung

2019

Sustainability

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“…GDP per capita, as a measure of income, is also almost certainly endogenous. Microstudies of energy demand often address price endogeneity (e.g., Miller and Alberini, 2016).…”

Section: Introductionmentioning

confidence: 99%

On income and price elasticities for energy demand: A panel data study

2021

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Obtaining reliable cross-country estimates of the income and price elasticity of energy demand requires a panel data model that can simultaneously account for endogeneity, heterogeneity, nonstationarity and cross-sectional dependence. We propose such an integrated framework and apply it to a very large dataset of 65 countries over the period 1960-2016 recently assembled by Liddle and Huntington (2020). We find that while the elasticities of income and price are non-linear, the income elasticity is generally in the range 0.6 to 0.8 and the price elasticity in the range -0.1 to -0.3. We also find that the income elasticity has been declining since the 1990s, which broadly corresponds to increasing awareness of the negative externalities associated with burning fossil fuels associated with the Kyoto Protocol.From a policy perspective, that the income energy elasticity is less than one, and has been declining since the 1990s, bodes well for climate change mitigation because it suggests that energy intensity will fall with economic growth.

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“…According to previous studies conducted, there are several studies that define as determinants of energy demand, education [14,15,19,20] and the energy price [16][17][18][21][22][23]. It is worth mentioning that there are few studies that analyze the effect of these two variables on energy consumption using a spatial methodology with panel data for European countries, especially of the EU, in the context of evaluating the energy saving policy of Kyoto in 2008.…”

Section: Introductionmentioning

confidence: 99%

Economic and Spatial Determinants of Energy Consumption in the European Union

et al. 2019

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In recent decades, various policies have been implemented to reduce energy consumption, as well as a considerable increase in research that analyzes the determinants of energy consumption, both with a standard feature, mitigating environmental degradation. However, few studies investigate the economic and spatial determinants of energy consumption in the European Union (EU). Therefore, to cover the knowledge gap, based on the review of the existing literature, this document is designed to analyze the determinants and energy policy in energy consumption in the EU. For this reason, the objective of this research is to analyze the effect of human capital, the price of oil, and Kyoto Protocol policy on energy consumption. In addition, the effect of contiguity and spatial concentration on energy consumption is studied for 34 European countries, of which 26 belong to the EU, for the period 2000–2016. For this, data collected from the World Bank (2017) and the World Energy Statistical Review (2017) were used. The work methodology is based on the application of econometric techniques for panel data, and spatial econometrics, based on the application of a Spatial Durbin Model (SDM), through which the existence of “spillovers” was determined in the implementation of the energy policy. The results of the estimates show a negative effect of the price of oil and human capital concerning energy consumption, and the variable "Policy" reflects a reduction in the energy consumption of the EU countries in the period analyzed. Additionally, the space panel confirms that the behavior of a country's energy consumption depends on its past values and the level of consumption presented by its neighbors, corroborating the importance of territorial contiguity in the success of environmental policy in the case of the European Union.

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Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data

Cited by 96 publications

References 48 publications

Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries

Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries

On income and price elasticities for energy demand: A panel data study

Economic and Spatial Determinants of Energy Consumption in the European Union

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