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Another Look at U.S. Passenger Vehicle Use and the 'Rebound' Effect from Improved Fuel Efficiency

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  • Clifton T Jones
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    Abstract

    Recently, Greene (1992) analyzed vehicle miles travelled for U.S. passenger vehicles over 1966-89 to econometrically estimate the "rebound" effect in fuel consumption resulting from improved fuel efficiency. He found that a static AR(1) model could not be rejected, implying that the rebound effect is small (13%) with no significant long-run adjustments, regardless of the assumed functional form (linear or loglinear). Another look at the data from a different model selection approach shows that while a loglinear AR(1) model is acceptable, the linear version is not. Using either form, a lagged dependent variable model cannot be rejected on statistical grounds yet has insignificant GNP effects, yielding similarly small short-run rebound effects but significant long-run rebound effects of about 30%. Thus, the evidence from these competing models for a significant long-run adjustment process is mixed, so that its presence cannot be completely ruled out.

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    Bibliographic Info

    Article provided by International Association for Energy Economics in its journal The Energy Journal.

    Volume (Year): Volume14 (1993)
    Issue (Month): Number 4 ()
    Pages: 99-110

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    Handle: RePEc:aen:journl:1993v14-04-a06

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    Cited by:
    1. Plotkin, Steven E & Greene, David, 1997. "Prospects for improving the fuel economy of light-duty vehicles," Energy Policy, Elsevier, vol. 25(14-15), pages 1179-1188, December.
    2. Anas, Alex & Hiramatsu, Tomoru, 2012. "The effect of the price of gasoline on the urban economy: From route choice to general equilibrium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 855-873.
    3. Tingting Wang & Cynthia Chen, 2014. "Impact of fuel price on vehicle miles traveled (VMT): do the poor respond in the same way as the rich?," Transportation, Springer, vol. 41(1), pages 91-105, January.
    4. Shrestha, Ram M. & Shrestha, Rabin, 2004. "Economics of clean development mechanism power projects under alternative approaches for setting baseline emissions," Energy Policy, Elsevier, vol. 32(12), pages 1363-1374, August.
    5. Sriananthakumar, Sivagowry, 2013. "Testing linear regression model with AR(1) errors against a first-order dynamic linear regression model with white noise errors: A point optimal testing approach," Economic Modelling, Elsevier, vol. 33(C), pages 126-136.
    6. Wohlgemuth, Norbert, 1997. "World transport energy demand modelling : Methodology and elasticities," Energy Policy, Elsevier, vol. 25(14-15), pages 1109-1119, December.
    7. Hymel, Kent M. & Small, Kenneth A. & Dender, Kurt Van, 2010. "Induced demand and rebound effects in road transport," Transportation Research Part B: Methodological, Elsevier, vol. 44(10), pages 1220-1241, December.
    8. Shrestha, Ram M. & Timilsina, Govinda R., 2002. "The additionality criterion for identifying clean development mechanism projects under the Kyoto Protocol," Energy Policy, Elsevier, vol. 30(1), pages 73-79, January.
    9. Chao Wei, 2013. "A Dynamic General Equilibrium Model of Driving, Gasoline Use and Vehicle Fuel Efficiency," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 650-667, October.
    10. Shigemi Kagawa & Yuriko Goto & Sangwon Suh & Keisuke Nansai & Yuki Kudoh, 2012. "Accounting for Changes in Automobile Gasoline Consumption in Japan: 2000–2007," Journal of Economic Structures, Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 1(1), pages 1-27, December.
    11. Berkhout, Peter H. G. & Muskens, Jos C. & W. Velthuijsen, Jan, 2000. "Defining the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 425-432, June.
    12. Binswanger, Mathias, 2001. "Technological progress and sustainable development: what about the rebound effect?," Ecological Economics, Elsevier, vol. 36(1), pages 119-132, January.
    13. Grepperud, Sverre & Rasmussen, Ingeborg, 2004. "A general equilibrium assessment of rebound effects," Energy Economics, Elsevier, vol. 26(2), pages 261-282, March.
    14. Michaelis, Laurie & Davidson, Ogunlade, 1996. "GHG mitigation in the transport sector," Energy Policy, Elsevier, vol. 24(10-11), pages 969-984.
    15. Kagawa, Shigemi & Nansai, Keisuke & Kudoh, Yuki, 2009. "Does product lifetime extension increase our income at the expense of energy consumption?," Energy Economics, Elsevier, vol. 31(2), pages 197-210.
    16. Matos, Fernando J.F. & Silva, Francisco J.F., 2011. "The rebound effect on road freight transport: Empirical evidence from Portugal," Energy Policy, Elsevier, vol. 39(5), pages 2833-2841, May.
    17. Su, Qing, 2011. "Induced motor vehicle travel from improved fuel efficiency and road expansion," Energy Policy, Elsevier, vol. 39(11), pages 7257-7264.
    18. Sorrell, Steve & Dimitropoulos, John & Sommerville, Matt, 2009. "Empirical estimates of the direct rebound effect: A review," Energy Policy, Elsevier, vol. 37(4), pages 1356-1371, April.
    19. Greene, David L, 1998. "Why CAFE worked," Energy Policy, Elsevier, vol. 26(8), pages 595-613, July.
    20. Paul R. Portney & Ian W.H. Parry & Howard K. Gruenspecht & Winston Harrington, 2003. "Policy Watch: The Economics of Fuel Economy Standards," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 203-217, Fall.

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