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Do gasoline prices exhibit asymmetry? Not usually!

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  • Douglas, Christopher C.

Abstract

Previous studies have found evidence of asymmetric price adjustment in U.S. retail gasoline prices in that gasoline prices rise more rapidly in response to a cost increase than fall in response to a cost decrease. By estimating a threshold cointegration model that allows for multiple regimes, I am able to test how sensitive this result is to outlying observations. In contrast to previous studies, I find little evidence of asymmetry for the vast majority of observations and that the asymmetry is being driven by a small number of outlying observations.

Suggested Citation

  • Douglas, Christopher C., 2010. "Do gasoline prices exhibit asymmetry? Not usually!," Energy Economics, Elsevier, vol. 32(4), pages 918-925, July.
    • Handle: RePEc:eee:eneeco:v:32:y:2010:i:4:p:918-925
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    References listed on IDEAS

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