Estimation of price and income elasticities for the Brazilian household electricity demand

Produced by: 
University of Sao Paulo
Available from: 
February 2017
Paper author(s): 
Daniel de Abreu Pereira Uhr
Júlia Gallego Ziero Uhr
André Luis Squarize Chagas
Topic: 
Macroeconomics - Economic growth - Monetary Policy
Poverty - Inequality - Aid Effectiveness
Year: 
2017

This paper fills a gap in the literature on residential energy consumption in Brazil. We estimate price and income elasticities for residential electricity consumption using disaggregated data at household level for the São Paulo metropolitan area. Data were obtained from Fundação Instituto de Pesquisas Econômicas (Fipe), which has complete access to Pesquisa de Orçamento Familiar (POF). Information about residential electricity consumption and household characteristics was available at two different periods, 1998 and 2008, which enabled us to adopt panel data estimation procedures. This study is the first to use Brazilian household level data on electricity consumption and a panel approach to estimate price and income elasticities. The results show that the price elasticity ranges from -0.26 to - 0.64 and the income elasticity between 0.11 and 0.32. Controlling for a variety of fixed effects, household and family characteristics, price and income elasticities for the short-run are, approximately, -0.50, and 0.21.

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