Demand for gasoline in Kuwait: An empirical analysis using cointegration techniques

Abstract This paper estimates the demand for gasoline in Kuwait for the period 1970–1989 using a cointegration and error correction model (ECM). It is found that gasoline demand is inelastic with respect to price in the short and long run, and while it is elastic in the long run, gasoline demand is inelastic with respect to income in the short run. This suggests that gasoline demand response to income changes is higher in the long run than in the short run. Furthermore, gasoline consumption adjusts towards its long-run level with about 52% of the adjustment occurring in the first year.

[1]  J. Bentzen.  An empirical analysis of gasoline demand in Denmark using cointegration techniques , 1994 .

[2]  Eric J. Miller,et al.  Disaggregate analysis of the demand for gasoline , 1990 .

[3]  Chris Chatfield,et al.  Introduction to Statistical Time Series. , 1976 .

[4]  Y. Hsing.  On the variable elasticity of the demand for gasoline: The case of the USA , 1990 .

[5]  G. Kouris.  Fuel consumption for road transport in the USA , 1983 .

[6]  D. Relles,et al.  Oil and Energy Demand in Developing Countries in 1990 , 1981 .

[7]  Alok Bhargava,et al.  Testing Residuals from Least Squares Regression for Being Generated by the Gaussian Random Walk , 1983 .

[8]  C. Granger,et al.  Co-integration and error correction: representation, estimation and testing , 1987 .

[9]  C. Garbacz.  Gasoline, Diesel, and Motorfuel Demand in Taiwan , 1989 .

[10]  M. N. Eltony.  The demand for gasoline in Kuwait , 1994 .

[11]  M. N. Eltony.  Transport Gasoline Demand In Canada , 1993 .

[12]  Jan Bentzen,et al.  Short- and long-run elasticities in energy demand: A cointegration approach , 1993 .

[13]  Christopher Hurst,et al.  Estimating energy and oil demand functions: A study of thirteen developing countries , 1990 .

[14]  S. A. Monroe,et al.  State gasoline consumption in the USA: An econometric analysis , 1985 .

[15]  Leonidas P. Drollas,et al.  The demand for gasoline: Further evidence , 1984 .

[16]  M. A. Al-Sahlawi.  Gasoline demand: The case of Saudi Arabia , 1988 .

[17]  Robert F. Engle,et al.  Forecasting and testing in co-integrated systems , 1987 .