Residential demand for electricity: empirical evidence from Greece using pseudo-panels

Abstract

This study investigates the behaviour of residential demand for electricity, employing a pseudo-panel methodology. The case of Greece, over the period 2009–2018, is taken as an example for our empirical investigation. The empirical analysis uses annual household panel data for the construction of 330 cohorts. The specification of cohorts is based on the date of birth, education level and geographical location of the head of the household. The econometric analysis is carried out using static and dynamic specifications and a quantile regression model. The results show that residential demand for electricity is price and income inelastic, both in the short and the long run. Electricity and heating oil appear to be complementary energy sources, while the household size and the education level are important determinants of residential demand for electricity. Income status has a marginal effect on demand for electricity, and the impact of urbanisation is insignificant. The quantile regression results show that, as the level of electricity use increases, demand for electricity becomes less income responsive and more price responsive. Our results show that a mix of structural energy measures along with economic policies could result in a decrease in electricity use and improve energy efficiency.

Keywords

Residential demand for electricity / Price elasticity / Income elasticity / Pseudo-panel / Greece / Economics / Applied Economics / Econometrics

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