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Modeling of Electricity Demand for Azerbaijan: Time-Varying Coefficient Cointegration Approach

King Abdullah Petroleum Studies and Research Center, PO Box 88550, Riyadh 11672, Saudi Arabia
Department of Statistics, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1141, Azerbaijan
Institute for Scientific Research on Economic Reforms, 88a, Hasan Bey Zardabi Avenue, Baku AZ1011, Azerbaijan
Research Program on Forecasting, Economics Department, The George Washington University, 2115 G Street, NW, Washington, DC 20052, USA
Institute of Control Systems, Azerbaijan National Academy of Sciences, B. Vahabzade Street 9, Baku AZ1141, Azerbaijan
Department of Economics, University of Perugia, Via Pascoli 20, 06123 Perugia, Italy
Department of International Relations, Baku Engineering University, Hasan Aliyev 120, Khirdalan AZ0101, Azerbaijan
Author to whom correspondence should be addressed.
Energies 2017, 10(11), 1918;
Received: 31 October 2017 / Revised: 15 November 2017 / Accepted: 17 November 2017 / Published: 21 November 2017
PDF [667 KB, uploaded 21 November 2017]


Recent literature has shown that electricity demand elasticities may not be constant over time and this has investigated using time-varying estimation methods. As accurate modeling of electricity demand is very important in Azerbaijan, which is a transitional country facing significant change in its economic outlook, we analyze whether the response of electricity demand to income and price is varying over time in this economy. We employed the Time-Varying Coefficient cointegration approach, a cutting-edge time-varying estimation method. We find evidence that income elasticity demonstrates sizeable variation for the period of investigation ranging from 0.48% to 0.56%. The study has some useful policy implications related to the income and price aspects of the electricity consumption in Azerbaijan. View Full-Text
Keywords: electricity consumption; Time-Varying Coefficient cointegration approach; Azerbaijan electricity consumption; Time-Varying Coefficient cointegration approach; Azerbaijan

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Mikayilov, J.I.; Hasanov, F.J.; Bollino, C.A.; Mahmudlu, C. Modeling of Electricity Demand for Azerbaijan: Time-Varying Coefficient Cointegration Approach. Energies 2017, 10, 1918.

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