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Estimation of Total Energy Consumption in Jordan 19801999 Evidence From Cointegration and Stock

Estimation of Total Energy Consumption in Jordan 19801999 Evidence From Cointegration and Stock The purpose of this study is to estimate the longrun elasticities of the demand consumption for total energy in Jordan for the 19801999 period. Assuming a simple linear relationship, in order to estimates the elasticities of a simple longrun demand equation, we then employ a procedure just recently prescribed by StockWatson 1993 known as Dynamic OLS DOLS. The DOLS procedure allows for cointegrated variables as well as tackling the problem of simultaneity amongst the regressors. Furthermore, Stock and Watson showed that DOLS is more favorable, particularly in small size samples, compared to a number of alternative estimators of longrun parameters, including those proposed by EngleGranger 1987, Johansen 1988 and error correction model. The analysis provided in this paper showed that the income elasticity of final energy consumption is 1.15, which indicated that the economic growth is accompanied by proportional increase in energy consumption. The responsiveness of energy consumption to price change is 1.14 suggesting that taxes on their own are likely to achieve government goals for energy conservation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic and Administrative Sciences Emerald Publishing

Estimation of Total Energy Consumption in Jordan 19801999 Evidence From Cointegration and Stock

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1026-4116
DOI
10.1108/10264116200400004
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to estimate the longrun elasticities of the demand consumption for total energy in Jordan for the 19801999 period. Assuming a simple linear relationship, in order to estimates the elasticities of a simple longrun demand equation, we then employ a procedure just recently prescribed by StockWatson 1993 known as Dynamic OLS DOLS. The DOLS procedure allows for cointegrated variables as well as tackling the problem of simultaneity amongst the regressors. Furthermore, Stock and Watson showed that DOLS is more favorable, particularly in small size samples, compared to a number of alternative estimators of longrun parameters, including those proposed by EngleGranger 1987, Johansen 1988 and error correction model. The analysis provided in this paper showed that the income elasticity of final energy consumption is 1.15, which indicated that the economic growth is accompanied by proportional increase in energy consumption. The responsiveness of energy consumption to price change is 1.14 suggesting that taxes on their own are likely to achieve government goals for energy conservation.

Journal

Journal of Economic and Administrative SciencesEmerald Publishing

Published: Jun 1, 2004

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