Interfuel Substitution: Evidence from the Markov Switching Minflex Laurent Demand System with BEKK Errors

B-Tier
Journal: The Energy Journal
Year: 2019
Volume: 40
Issue: 6
Pages: 111-128

Authors (2)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate interfuel substitution in the United States using the minflex Laurent demand system and a century of data (from 1919 to 2012). We relax the assumption of constant parameters in the demand system, and also relax the ho-moskedasticity assumption, instead assuming that the covariance matrix of the errors is time-varying. Our results are consistent with theoretical regularity and indicate that the Morishima elasticities of substitution are always positive for all pairs of the energy goods (suggesting substitutability), but exhibit large swings across two regimes, generally being higher in the high demand volatility regime before the 1950s.

Technical Details

RePEc Handle
repec:sae:enejou:v:40:y:2019:i:6:p:111-128
Journal Field
Energy
Author Count
2
Added to Database
2026-01-29