Template-Type: ReDIF-Article 1.0
Author-Name:  John T. Cuddington and Leila Dagher
Title:  Estimating Short and Long-Run Demand Elasticities: A Primer with Energy-Sector Applications
Classification-JEL: F0
Volume:  Volume 36
Issue:  Number 1
Year:  2015
Abstract:  Many empirical exercises estimating demand functions, whether in energy economics or other fields, are concerned with estimating dynamic effects of price and income changes over time. This paper first reviews a number of commonly used dynamic demand specifications to highlight the implausible a priori restrictions that they place on short and long-run elasticities. Such problems are easily avoided by adopting a general-to-specific modeling methodology. Second, it discusses functional forms and estimation issues for getting point estimates and associated standard errors for both short and long-run elasticities - key information that is missing from many published studies. Third, our proposed approach is illustrated using a dataset on Minnesota residential electricity demand. 
Handle: RePEc:aen:journl:ej36-1-07
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=2603
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