Facebook LinkedIn Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Energy Demand Elasticities in Industrialized Countries: A Survey

A high price elasticity for energy demand implies a long-term ability of the economy to absorb the impact of higher energy prices. Thus price shocks, after generating pronounced inflationary and recessionary effects over the short term, do not act as a constraint to economic growth over the longer term. By contrast, a low price elasticity implies weak reactions to increasing energy costs and a protracted adverse effect on output and inflation. Unfortunately, a survey of the literature on energy demand elasticities shows diverse results. Should econometric results be used for policymaking and planning, then a critical and eclectic attitude is imperative to screen out the most relevant aspects of the empirically determined price elasticities.

Purchase ( $25 )

Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

Keywords: Energy demand elasticities, Price shocks, Inflation, Recessionary effects

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No3-5

Published in Volume 4, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.