THE DEMAND FOR ELECTRICITY AND NATURAL GAS IN THE NORTHEASTERN UNITED STATES

This paper examines the demand for natural gas and electricity in residential, commercial and industrial sectors of the Northeastern United States comprising seven states using annual state-level panel data over the period between 1997and 2011. It applies panel unit root and cointegration tests and then estimates the parameters using four alternative estimators: dynamic fixed effect (DFE), mean group (MG), pooled mean group (PMG) and Common correlated effect mean group (CCEMG). PMG showed better performance compared to estimators obtained from other three models. The panel unit root and cointegration tests show that the series are I (1) and variables are cointegrated. The estimated results show that long-run price elasticity for natural gas in residential, commercial and industrial sectors are -0.05, -0.96 and -0.20; and for electricity they are -0.11, 0.10 and -2.07 respectively. The corresponding long-run income elasticities are 3.05, 0.86, & 0.07 for natural gas and 0.93, 0.53 and 0.18 for electricity, respectively. The cooling degree days (CDD) and heating degree days (HDD) have positive effects on demand for electricity and natural gas in all but not for electricity in industrial sector.


Issue Date:
2016
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/230114
Total Pages:
30
JEL Codes:
Q41




 Record created 2017-04-01, last modified 2017-09-18


Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)