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One more for the road: Reconsidering whether OECD gasoline income and price elasticities have changed over time

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  • Liddle, Brantley
  • Parker, Steven

Abstract

This paper determines whether gasoline income and price elasticities have changed. To do so, the paper considers a balanced, but particularly long (1960–2017) panel of 17 OECD countries. In addition, it employs two methods that vary to the extent that they allow for cross-sectional and time heterogeneity: rolling window, mean group regressions and time varying estimates. We find that the price elasticity increased in absolute terms during the energy crises (1973–1985), peaking thereafter and then becoming smaller. While income elasticities are not constant over time, they do not deviate much from time-invariant estimates. Similarly, price elasticities have been more or less stable for about the past two decades. This last finding suggests that the price peak of the 1970s-early 1980s had a permanent effect on demand that was not replicated during the more recent (i.e., centered around 2008), and similar in magnitude, price increase and fall.

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  • Liddle, Brantley & Parker, Steven, 2022. "One more for the road: Reconsidering whether OECD gasoline income and price elasticities have changed over time," Energy Economics, Elsevier, vol. 114(C).
    • Handle: RePEc:eee:eneeco:v:114:y:2022:i:c:s0140988322004157
    DOI: 10.1016/j.eneco.2022.106280
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    Cited by:

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    More about this item

    Keywords

    Gasoline demand; Income and price elasticities; Time varying estimates; Rolling window regressions; Cross-sectionally dependent panels; Energy crises;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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