Long-run and Short-run Demand for Oil by Developing Countries: an Empirical Analysis
This paper presents some evidence against the log-linear specification of the demand-for-oil function, as applied to aggregate data on developing countries. It is shown that the price of oil has a significant effect on demand in the short run but not in the long run. It is also shown that economic activity, as proxied by output or income, is the most important determinant of the demand for oil and that the elasticity of substitution vis-à-vis coal is extremely low.
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Document Type: Research Article
Affiliations: School of Economics, La Trobe University, Bundoora, Victoria, Australia
Publication date: March 1, 1998