Sectoral demand for petroleum in Thailand

This paper examines the short-run and long-run determinants of final oil consumption in seven major economic sectors in Thailand. Two different approaches are compared. The first approach uses dynamic panel data estimation techniques taking into account oil consumption of the whole economy in an aggregate manner. The second approach employs the ADL equilibrium correction framework to model oil demand in each economic sector separately. The dynamic panel data approach estimates appear consistent with economic theory. The coefficients have the correct signs and the magnitudes of long-run responses are larger than the short-run responses. The single sector model approach yields similar but richer results. Relaxing the identical slope assumption reveals interesting sector specific characteristics.