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Analyzing light fuel demand elasticities in Brazil using cointegration techniques

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  • Rodrigues, Luciano
  • Bacchi, Mirian Rumenos Piedade

Abstract

This study is intended to assess the sensitivity of demand for light fuels in Brazil to changes in prices and income, considering the unique characteristics of the Brazilian fleet, the lack of convergence across studies available for the domestic market and its importance in discussions on climate change and national security, among others. For this purpose, the short- and long-term price and income elasticities of light fuel demand were estimated using cointegration techniques, based on an empirical model that incorporates the unique features of the internal market. Despite the characteristics of the Brazilian fleet, the results showed that the elasticities found for the national market are similar to those seen in other countries. The conceptual framework and empirical analysis that were used also allowed for a better understanding of the differences between the results of studies on demand for gasoline, ethanol or natural gas in Brazil and those found in the international literature, providing key players in the sector with crucial information for designing public policies and business strategies.

Suggested Citation

  • Rodrigues, Luciano & Bacchi, Mirian Rumenos Piedade, 2017. "Analyzing light fuel demand elasticities in Brazil using cointegration techniques," Energy Economics, Elsevier, vol. 63(C), pages 322-331.
    • Handle: RePEc:eee:eneeco:v:63:y:2017:i:c:p:322-331
    DOI: 10.1016/j.eneco.2017.02.012
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    More about this item

    Keywords

    Cointegration; Fuel demand; Time series; Private transportation; Elasticities;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • D1 - Microeconomics - - Household Behavior

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