SHORT-RUN AND LONG-RUN ELASTICITIES IN ENERGY DEMAND - A COINTEGRATION APPROACH

Short- and long-run energy demand elasticities are estimated on Danish annual data for 1948-90. Energy consumption, the real price of energy and real GDP appear to be non-stationary variables. Cointegration and error-correction methods are therefore applied. All estimated parameters have the expected signs and magnitudes and no evidence is found of a structural break in energy demand caused by the increases in real energy prices since 1973/74.