Longitudinal working models

The paper uses household expenditure survey data and alternative functional specifications of Engel's laws to establish an empirical pattern of disaggregate energy (ie electricity, gas, other fuels and gasoline) demand characterized by different demographic attributes for use in a combined panel data model of energy consumption and impact in Australia. The findings lend support, in terms of statistical efficiency and economic–theoretic plausibility, to the dominance of the Working form over the conventional linear Allen–Bowley function. Energy as a whole is a necessity while at the disaggregate level gasoline is considered a luxury. The findings indicate in this respect the existence of demand elasticity bias in aggregate energy models.