A REGIONAL STUDY OF THE RESIDENTIAL DEMAND FOR ELECTRICITY: A COMPARISON OF THE OLS, CSHTW A, AND CSCTW A MODELS

Abstract

Following Taylor (1975) and Houthakker (1980), we estimate residential demand for electricity for five Plains states during 1981-90 with the cross-sectionally correlated and time-wise autoregressive model (CSCTW A) that simultaneously takes into consideration heteroscedasticity, autocorrelation, and spatial correlation. The CSCTWA model yields more efficient estimates with smaller standard errors. Th.e price of natural gas is insignificant at the 5% level on a two-tail ' test if the CSCTWA model is not considered. The log-linear form cannot be rejected, whereas the linear form can be rejected. In the long-run, residential demand for electricity is less elastic and falls into the category of a normal good. (Q4 .. Cl)