Long-run water demand estimation: Habits, adjustment dynamics and structural breaks

Abstract: This paper examines a water demand equation for Milan for the second half of the twentieth century: 1950-2001. We focus mainly on the effects of price and habits, but also account for other factors in the demand for water such as climate, income and productive activity. Allowing for trend break stationarity or non-linear trend stationarity we find evidence against the unit root hypothesis for many time series. Based on this result, standard cointegration analysis would not be appropriate; therefore we adopt an alternative estimation and testing procedure. We focus in particular on the so called bounds testing approach which can be applied irrespective of the level of integration of the variables and which can be a useful modelling strategy given that dynamics are important when estimating a water demand equation. The main results are that long run price elasticity is higher than short run elasticity, and that consumption habits are relevant. We also find that both climate, sectoral

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch
• Notes: Postprint ; begutachtet (peer reviewed) ; In: Applied Economics (2010) ; 50

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Veröffentlichung
• (where): Mannheim
• (when): 2010
• Creator: Musolesi, Antonio ; Nosvelli, Mario

Further information

• DOI: 10.1080/00036840903066642
• URN: urn:nbn:de:0168-ssoar-243088
• Rights: Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 25.03.2025, 1:45 PM CET