Residential electricity demand dynamics in Turkey

Abstract This article provides fresh empirical evidences for the income and price elasticies of the residential energy demand both in the short-run and long-run for Turkey over the period 1968–2005, using the bounds testing procedure to cointegration. The computed elasticities of income and price are consistent with the previous studies and, as expected, the long-run elasticities are greater than the short-run elasticities. An augmented form of Granger causality analysis is implemented among residential electricity, income, price and urbanization. In the long-run, causality runs interactively through the error-correction term from income, price and urbanization to residential energy but the short-run causality tests are inconclusive The parameter stability of the short-run as well as long-run coefficients in the residential energy demand function are tested. The results of these tests display a stable pattern.

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