Dynamic OLS and Regime Switching Models to Forecast the Demand for Electricity in the Northeast of Brazil (original) (raw)

The objective of this paper was to estimate the residential, commercial and industrial demand for electric energy in the Northeast of Brazil in the period . Two different methodologies were used to compute price and income elasticities of demand: i) DOLS, proposed by ; and ii) Regime Switching, proposed by . Error Correction Models were estimated using the co-integrating vectors. These models were used to perform long run forecasts of demand for the period 2004-2010. The main results are then compared to those from other studies about price and income elasticity of demand for electric energy in Brazil. Furthermore, an analysis of forecast performance shows that these models predict as good as or better than Eletrobrás and Siqueira, Cordeiro Jr. and Castelar (2006).

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