Price and income elasticities of crude oil import demand in South Africa: A cointegration analysis

This paper examines the demand for imported crude oil in South Africa as a function of real income and the price of crude oil over the period 1980-2006 We carried out the Johansen co integration multivariate analysis to determine the long-run income and price elasticities A unique long-run cointegration relationship exists between crude oil imports and the explanatory variables The short-run dynamics are estimated by specifying a general error correction model. The estimated long-run price and income elasticities of -0 147 and 0 429 suggest that import demand for crude oil is price and income inelastic There is also evidence of unidirectional long-run causality running from real GDP to crude oil imports (C) 2010 Elsevier Ltd All rights reserved