Short-run and long-run elasticities of diesel demand in Korea

Kyoung Min Lim; Myunghwan Kim; Chang Seob Kim; Seung Hoon Yoo

doi:10.3390/en5125055

Short-run and long-run elasticities of diesel demand in Korea

Kyoung Min Lim, Myunghwan Kim, Chang Seob Kim, Seung Hoon Yoo

Dept. of Future Energy Convergence

Research output: Contribution to journal › Article › peer-review

12 Scopus citations

Abstract

This paper investigates the demand function for diesel in Korea covering the period 1986-2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be -0.357 and -0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.

Original language	English
Pages (from-to)	5055-5064
Number of pages	10
Journal	Energies
Volume	5
Issue number	12
DOIs	https://doi.org/10.3390/en5125055
State	Published - Dec 2012

Keywords

Co-integration
Diesel demand
Elasticity
Error-correction model
Korea

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Cite this

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title = "Short-run and long-run elasticities of diesel demand in Korea",

abstract = "This paper investigates the demand function for diesel in Korea covering the period 1986-2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be -0.357 and -0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.",

keywords = "Co-integration, Diesel demand, Elasticity, Error-correction model, Korea",

author = "Lim, \{Kyoung Min\} and Myunghwan Kim and Kim, \{Chang Seob\} and Yoo, \{Seung Hoon\}",

year = "2012",

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doi = "10.3390/en5125055",

language = "English",

volume = "5",

pages = "5055--5064",

journal = "Energies",

issn = "1996-1073",

number = "12",

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T1 - Short-run and long-run elasticities of diesel demand in Korea

AU - Lim, Kyoung Min

AU - Kim, Myunghwan

AU - Kim, Chang Seob

AU - Yoo, Seung Hoon

PY - 2012/12

Y1 - 2012/12

N2 - This paper investigates the demand function for diesel in Korea covering the period 1986-2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be -0.357 and -0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.

AB - This paper investigates the demand function for diesel in Korea covering the period 1986-2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be -0.357 and -0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.

KW - Co-integration

KW - Diesel demand

KW - Elasticity

KW - Error-correction model

KW - Korea

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SP - 5055

EP - 5064

JO - Energies

JF - Energies

IS - 12

ER -

Short-run and long-run elasticities of diesel demand in Korea

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Keywords

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