Long Run Elasticities of Demand for Natural Gas: OECD Panel Data Evidence


ENERGY SOURCES PART B-ECONOMICS PLANNING AND POLICY, vol.9, no.4, pp.334-341, 2014 (SCI-Expanded) identifier identifier


Natural gas consumption has been analyzed intensively especially within the last three decades due to its growing environmental and economical impacts among other consumption goods. This article aims at first observing the outputs of literature evidence regarding the demand for natural gas and, second, estimating the parameters of function for natural gas consumption. To this end, this article employs the panel data for eight Organization for Economic Cooperation and Development countries to seek responses of per capita natural gas consumption to per capita income and natural gas price. Therefore, panel unit root tests, panel cointegration analyses and panel ordinary least squares (OLS), fully modified OLS (FMOLS) and dynamic OLS (DOLS) estimations are conducted to obtain long-run parameter estimates of the function. Throughout analyses of cointegration, FMOLS, and DOLS regressions with homogeneous and heterogeneous variance-covariance structures, this work obtains slightly higher than unit elasticities together with expected signs throughout majority of estimations for the period of 1979-2006.