The Demand for Electricity in Kuwait: A Cointegration Analysis

Osama Alfalah, Lama Alhumaidan and Deniz Baglan
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Osama Alfalah: Economics and Finance, Gulf University for Science and Technology, West Mishref, Kuwait,
Lama Alhumaidan: Department of Economics Public Authority for Applied Education and Training, Kuwait City, Kuwait
Deniz Baglan: Department of Economics, Howard University, 2400 Sixth Street, N.W. Washington, DC, 20059, USA

International Journal of Energy Economics and Policy, 2020, vol. 10, issue 6, 9-13

Abstract: In this paper, we investigate the determinants of electricity demand in Kuwait and evaluate their impact on electricity consumption. In order to do this, we use the standard demand equation, cointegration techniques, and the error correction model on annual time series data for Kuwait from 1972 to 2017. One of the important features of our contribution is that it covers the most recently available data, in which we use the longest annual period (45 years) compared to all other studies of electricity demand in the region. We find that income elasticity for Kuwaiti consumers is insignificant both in short-run and the long run. This indicates that income has no impact on the consumption of electricity in Kuwait. Additionally, the short-run price elasticity is -0.22 while the long-run is -1.22, suggesting a negative yet elastic relationship between the electricity price in Kuwait and the demand in the long-run, while the short-run is inelastic.

Keywords: electricity demand; structural time series model; cointegration. (search for similar items in EconPapers)
JEL-codes: C22 Q41 Q43 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2020-06-2

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