Estimating the Demand for Diesel in Agriculture Sector of Iran

Authors

  • Lotfali Agheli Economic Research Institute, Tarbiat Modares University

Abstract

This paper estimates per capita demand for diesel by agricultural sector in Iran using Auto-Regressive Distributed Lags (ARDL) method over 1973-2012. The findings indicate that the demand for diesel is relatively inelastic in response to changes in its price, electricity acts as substitute input for diesel, diesel is a necessary input in agriculture, and mechanization index, despite having expected positive sign, fails to explain variations in diesel use. In addition, there is a long-run relationship among variables. According to Error Correction Model, the speed of adjustment in short-run distortions towards long-run equilibrium is moderate. The findings show that government policy on cutting energy subsidies is not enough for reducing diesel consumption in Iranian agricultural sector. Thus, non-price measures such as innovations in inter-fuel substitution technologies and applying efficient machineries are recommended to manage energy uses in agriculture.Keywords: Demand; Price; Diesel; Electricity; ARDLJEL Classifications: C51; Q16; Q41

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Author Biography

Lotfali Agheli, Economic Research Institute, Tarbiat Modares University

Assistant Professor of Economics

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Published

2015-07-13

How to Cite

Agheli, L. (2015). Estimating the Demand for Diesel in Agriculture Sector of Iran. International Journal of Energy Economics and Policy, 5(3), 660–667. Retrieved from https://econjournals.com/index.php/ijeep/article/view/1219

Issue

Vol. 5 No. 3 (2015)

Section

Articles

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