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Long-run water demand estimation : Habits, adjustment dynamics and structural breaks


Musolesi, Antonio; Nosvelli, Mario


Bitte beziehen Sie sich beim Zitieren dieses Dokumentes immer auf folgenden Persistent Identifier (PID):http://nbn-resolving.de/urn:nbn:de:0168-ssoar-243088

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Abstract This paper examines a water demand equation for Milan for the second half of the twentieth century: 1950-2001. We focus mainly on the effects of price and habits, but also account for other factors in the demand for water such as climate, income and productive activity. Allowing for trend break stationarity or non-linear trend stationarity we find evidence against the unit root hypothesis for many time series. Based on this result, standard cointegration analysis would not be appropriate; therefore we adopt an alternative estimation and testing procedure. We focus in particular on the so called bounds testing approach which can be applied irrespective of the level of integration of the variables and which can be a useful modelling strategy given that dynamics are important when estimating a water demand equation. The main results are that long run price elasticity is higher than short run elasticity, and that consumption habits are relevant. We also find that both climate, sectoral and technological modifications affect water consumption, while income is not significant. Finally, the changes to pricing schemes in the mid seventies provoked reactions of different magnitudes among households and firms.
Thesaurusschlagwörter price elasticity; water management; Italy
Klassifikation Wirtschaftssektoren
Methode historisch
Freie Schlagwörter bounds testing, ardl approach to cointegration, long run water consumption, Mailand
Sprache Dokument Englisch
Publikationsjahr 2010
Seitenangabe 50 S.
Zeitschriftentitel Applied Economics (2010)
DOI http://dx.doi.org/10.1080/00036840903066642
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)