Time-varying income and price elasticities for energy demand: evidence from a middle-income panel

Brantley Liddle, Russell Smyth, Xibin Zhang

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2 Citations (Scopus)

Abstract

We estimate time-varying income and price elasticities for energy demand for a 26-country, middle-income balanced panel that spans 1996–2014. To do so, we employ a recently developed local linear dummy estimation method to estimate the trend and coefficient functions. We find that the price elasticity for energy demand is either insignificant or positive and small. While the income elasticity for energy demand behaves in a non-linear fashion over-time, it is always less than unity and is generally within 0.6–0.8. A GDP elasticity of less than one suggests that these middle-income countries are on the right-hand-side of an inverted-U energy intensity-GDP path that is consistent with the dematerialization process. Also, this finding suggests that energy intensity — but not energy consumption — in these countries will fall with economic growth. Hence, intensity-based targets may be met in a business-as-usual setting, but aggregate or per capita-based carbon emissions targets would likely require policy interventions.

Original languageEnglish
Article number104681
Number of pages10
JournalEnergy Economics
Volume86
DOIs
Publication statusPublished - Feb 2020

Keywords

  • Income elasticity
  • Middle-income countries
  • Price elasticity
  • Time-varying

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