{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

electric paper - International Journal of Energy Economics...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
International Journal of Energy Economics and Policy Vol. 1, No. 4, 2011, pp.116-139 ISSN: 2146-4553 www.econjournals.com An Empirical Analysis of Electricity Demand in Pakistan Noel Alter Department of Economics, Forman Christian College, (A Chartered University Lahore Pakistan). E-mail: [email protected] Shabib Haider Syed Associate Professor and Chairman Department of Economics, Forman Christian College, (A Chartered University Lahore Pakistan). Email: [email protected] ABSTRACT: Study utilizes cointegration and vector error correction analysis to determination the long and short run dynamics between electricity demand and its determinants. Study uses time series data for Pakistan from 1970 to 2010. Johansen cointegration test indicate that variables integrate in the long run. Error correction term reflects the convergence of variables towards equilibrium. Electricity acts as a necessity in short run and luxury in long run. Study concludes that effective price and income policies, group pricing policy and peak-load pricing policy should be exercised for electricity demand management. Keywords: Electricity Intensity, Peak-load Pricing, Derived demand, Pakistan JEL Classifications: Q400, Q410 1. INTRODUCTION Electricity is considered the backbone for an economy’s prosperity and progress thus it plays a crucial role in socio-economic development. With the passage of time as rapid development and technological innovation has taken place the utilization of energy resources has also mounted. Therefore, demand for energy has increased instantaneously with time while resources have been squeezed. Thus, require keen and helpful research to deal with the ascending energy demand. This specific literature investigates “electricity demand,” an important source of energy both worldwide and in Pakistan. In Pakistan, electricity is among the most used energy resources. Electricity is used for various purposes at residential, industrial, commercial, and agricultural sectors. Moreover, electricity in these sectors has become a necessity. In view of Khan and Qayyum (2008) in Pakistan 60 to 70 percent of the population has access to electricity consumption. They are connected to the nation’s electricity grid; it indicates that as more and more electrification will occur demand will increase, requiring proper planning in the field of electricity demand management. It is also a fact that price distortion in different sectors and more use of electrical appliances boosts the consumption level of electricity. Currently Pakistan is going through the worst energy and electricity crisis of its history. Electricity shortfall has increased about 5000 Mw, load shedding has increased from 8 to 14 hours daily, industrial growth has declined, and ultimately the whole economy has suffered. Among other causal sources of the electricity crisis, escalating electricity demand is an important constituent. Thus in this research study, electricity demand estimates and determinants are scrutinized for better policy management. The impact of real income, electricity prices, stock of electric appliances, and number of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}