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What Do Consumers Believe About Future Gasoline Prices?

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  • Soren T. Anderson
  • Ryan Kellogg
  • James M. Sallee

Abstract

A full understanding of how gasoline prices affect consumer behavior frequently requires information on how consumers forecast future gasoline prices. We provide the first evidence on the nature of these forecasts by analyzing two decades of data on gasoline price expectations from the Michigan Survey of Consumers. We find that average consumer beliefs are typically indistinguishable from a no-change forecast, justifying an assumption commonly made in the literature on consumer valuation of energy efficiency. We also provide evidence on circumstances in which consumer forecasts are likely to deviate from no-change and on significant cross-consumer forecast heterogeneity.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16974.

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Date of creation: Apr 2011
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Handle: RePEc:nbr:nberwo:16974

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  5. Ron Alquist & Lutz Kilian, 2010. "What do we learn from the price of crude oil futures?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(4), pages 539-573.
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  7. Christopher R. Knittel & Ryan Sandler, 2011. "Carbon Prices and Automobile Greenhouse Gas Emissions: The Extensive and Intensive Margins," NBER Chapters, in: The Design and Implementation of U.S. Climate Policy, pages 287-299 National Bureau of Economic Research, Inc.
  8. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2009. "Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets," NBER Working Papers 15590, National Bureau of Economic Research, Inc.
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  17. Goldberg, Pinelopi Koujianou, 1998. "The Effects of the Corporate Average Fuel Efficiency Standards in the US," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 1-33, March.
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  21. Soren T. Anderson & Ryan Kellogg & James M. Sallee & Richard T. Curtin, 2011. "Forecasting Gasoline Prices Using Consumer Surveys," American Economic Review, American Economic Association, vol. 101(3), pages 110-14, May.
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Cited by:
  1. Kenneth Small, 2011. "Energy Policies for Passenger Motor Vehicles," Working Papers 101108, University of California-Irvine, Department of Economics.
  2. Klier, Thomas & Linn, Joshua, 2011. "Fuel Prices and New Vehicle Fuel Economy in Europe," Discussion Papers dp-11-37, Resources For the Future.
  3. McConnell, Virginia, 2013. "The New CAFE Standards: Are They Enough on Their Own?," Discussion Papers dp-13-14, Resources For the Future.
  4. Aghion, Philippe & Dechezleprêtre, Antoine & Hemous, David & Martin, Ralf & Van Reenen, John, 2012. "Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry," CEPR Discussion Papers 9267, C.E.P.R. Discussion Papers.
  5. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel & Nathan C. Parker, 2011. "Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies," Working Papers 1116, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  6. Klier, Thomas & Linn, Joshua, 2013. "Fuel prices and new vehicle fuel economy—Comparing the United States and Western Europe," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 280-300.
  7. Linn, Joshua, 2013. "The Rebound Effect for Passenger Vehicles," Discussion Papers dp-13-19, Resources For the Future.
  8. Wolfgang Pollan, 2013. "Inflation Persistence or the Protracted Effects of Commodity Price Changes?," WIFO Working Papers 451, WIFO.

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