An Empirical Analysis of Gasoline Demand in Kuwait
A COINTEGRATION ANALYSIS
DOI:
https://doi.org/10.15173/esr.v25i1.4713Abstract
The objective of this paper was to investigate the determinants of gasoline demand in Kuwait and to assess their impact on consumption. We used the Standard Demand Equation (SDE), the Cointegration Techniques, and the Error Correction Model (ECM) on annual time-series data for Kuwait from 1972 to 2018. We obtained a price elasticity of -0.341 in the long-run, while the short-run price elasticity was insignificant, indicating that changes in prices had minimal or no effect on gasoline consumption in Kuwait. This may be at least in part due to consumers shifting their consumption from a higher grade of gasoline to a less expensive grade when prices changed. We also found that the income elasticity is 0.175 in the short-run and 0.234 in the long-run, indicating that income will be more effective in changing consumption in the long-run. We conclude that reducing gasoline subsidies could result in substantial governmental savings, but this may have an inequitable impact on low-income Kuwaitis.
Additional Files
Published
Issue
Section
License
Rights for Authors
As further described in our submission agreement (the Submission Agreement), in consideration for publication of the article, the authors assign to Energy Studies Review all copyright in the article, subject to the expansive personal--use exceptions described below.
Attribution and Usage Policies
Reproduction, posting, transmission or other distribution or use of the article or any material therein, in any medium as permitted by a personal-use exemption or by written agreement of Energy Studies Review, requires credit to Energy Studies Review as copyright holder (e.g., Energy Studies Review © 2014).
Personal-use Exceptions
The following uses are always permitted to the author(s) and do not require further permission from DigitalCommons@McMaster provided the author does not alter the format or content of the articles, including the copyright notification:
- Storage and back-up of the article on the author's computer(s) and digital media (e.g., diskettes, back-up servers, Zip disks, etc.), provided that the article stored on these computers and media is not readily accessible by persons other than the author(s);
- Posting of the article on the author(s) personal website, provided that the website is non-commercial;
- Posting of the article on the internet as part of a non-commercial open access institutional repository or other non-commercial open access publication site affiliated with the author(s)'s place of employment (e.g., a Phrenology professor at the University of Southern North Dakota can have her article appear in the University of Southern North Dakota's Department of Phrenology online publication series); and
- Posting of the article on a non-commercial course website for a course being taught by the author at the university or college employing the author.
People seeking an exception, or who have questions about use, should contact the editors.
