Electricity prices and fuel costs: Long-run relations and short-run dynamics
The paper examines the long-run relation and short-run dynamics between electricity prices and three fossil fuel prices - coal, natural gas and crude oil - using annual data for the U.S. for 1960-2007. The results suggest (1) a stable long-run relation between real prices for electricity and coal (2) Bi-directional long-run causality between coal and electricity prices. (3) Insignificant long-run relations between electricity and crude oil and/or natural gas prices. And (4) no evidence of asymmetries in the adjustment of electricity prices to deviations from equilibrium. A number of implications are addressed.
Year of publication: |
2009
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Authors: | Mohammadi, Hassan |
Published in: |
Energy Economics. - Elsevier, ISSN 0140-9883. - Vol. 31.2009, 3, p. 503-509
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Publisher: |
Elsevier |
Keywords: | Electricity prices Fuel costs Cointegration Error-correction model Asymmetric adjustment |
Saved in:
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