Estimating Price and Production Elasticities of Natural Gas in the Manufacture of Basic Metals Industries of Iran

Shirani Fakhr, Zohreh

doi:10.29252/jemr.8.30.171

Volume 8, Issue 30 (12-2017) jemr 2017, 8(30): 171-220 | Back to browse issues page

‎ 10.29252/jemr.8.30.171

‎ 20.1001.1.22286454.1396.8.30.3.4

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Shirani Fakhr Z. Estimating Price and Production Elasticities of Natural Gas in the Manufacture of Basic Metals Industries of Iran. jemr 2017; 8 (30) :171-220
URL: http://jemr.khu.ac.ir/article-1-1377-en.html

Estimating Price and Production Elasticities of Natural Gas in the Manufacture of Basic Metals Industries of Iran

Zohreh Shirani Fakhr ^*

Azad university of Dehaghan , Zohrehshirani@gmail.com

Abstract: (6504 Views)

In this study, we estimate the demand for natural gas in the subsection manufacture of basic metals of Iran using structural time series model (STSM) over the period of time 1981-2013. Such model contains unobservable elements which have been transported to state space model with the use of kalman filter and is estimated by implementing maximum likelihood approach. Also, because the Targeting of Subsidies Plan was approved by the Iranian parliament at the end of 2010, so we evaluate the role of this plan on energy demand of industrial subsectors. Finding of the research is that, first of all the nature of the trend is smooth one. Secondly, it is changing on a nonlinear basis. The estimated demand function shows that price elasticity for natural gas in the long and short run, correspondingly, are (-0.30) and (-0.79) and production elasticities of natural gas in the short and long run, correspondingly, are (0.17) and (0.38). Furthermore, Cross elasticity for electricity and gasoline in the long and short run, correspondingly, are substitute and complementary goods. In addition, the result of evaluating effect of the Targeting of Subsidies Plan show that estimated natural gas demand functions can explain the impact of this policy.

Keywords: Demand for Energy, Manufacture of Basic Metals Industries, Industrial sector, Structural Time Series Model, Underling Energy Demand Trend, State Space Model

Full-Text [PDF 657 kb] (3268 Downloads)

Type of Study: Applicable | Subject: انرژی، منابع و محیط زیست
Received: 2017/02/27 | Accepted: 2017/12/20 | Published: 2018/03/6

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