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Cointegration and the demand for gasoline

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  • Bhaskara Rao, B.
  • Rao, Gyaneshwar

Abstract

Since the early 1970s, there has been a worldwide upsurge in the price of energy and in particular of gasoline. Therefore, demand functions for energy and its components like gasoline have received much attention. However, since confidence in the estimated demand functions is important for use in policy and forecasting, following [Amarawickrama, H.A., Hunt, L.C., 2008. Electricity demand for Sri Lanka: A time series analysis. Energy Economics 33, 724-739], this paper estimates the demand for gasoline is estimated with five alternative time series techniques with data from Fiji. Estimates with these alternative techniques are very close, and thus increase our confidence in them. We found that gasoline demand is both price and income inelastic.

Suggested Citation

  • Bhaskara Rao, B. & Rao, Gyaneshwar, 2009. "Cointegration and the demand for gasoline," Energy Policy, Elsevier, vol. 37(10), pages 3978-3983, October.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:10:p:3978-3983
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    3. Dahl, Carol A., 2012. "Measuring global gasoline and diesel price and income elasticities," Energy Policy, Elsevier, vol. 41(C), pages 2-13.
    4. Mohamad Taghvaee, Vahid & Hajiani, Parviz, 2014. "Price and Income Elasticities of Gasoline Demand in Iran: Using Static, ECM, and Dynamic Models in Short, Intermediate, and Long Run," MPRA Paper 70054, University Library of Munich, Germany.
    5. Thomas M. Fullerton, Jr. & Jorge A. Ibarra Salazar & Mario Elizalde, 2015. "Microeconomic Gasoline Consumption Anomalies in Mexico: 1997-2007," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 709-722, April.
    6. Carlos Esteban Posada P., 1995. "Dinero, Interes, Inflacion Y Fluctuaciones Economicas En Colombia Desde 1958," Borradores de Economia 2365, Banco de la Republica.
    7. Scott, K. Rebecca, 2011. "Demand and price volatility: rational habits in international gasoline demand," CUDARE Working Papers 121931, University of California, Berkeley, Department of Agricultural and Resource Economics.
    8. Kakali Kanjilal & Sajal Ghosh, 2018. "Revisiting income and price elasticity of gasoline demand in India: new evidence from cointegration tests," Empirical Economics, Springer, vol. 55(4), pages 1869-1888, December.
    9. Scott, K. Rebecca, 2015. "Demand and price uncertainty: Rational habits in international gasoline demand," Energy, Elsevier, vol. 79(C), pages 40-49.
    10. Rao, B. Bhaskara & Vadlamannati, Krishna Chaitanya, 2009. "Estimates of the level and growth effects of human capital in India," MPRA Paper 17480, University Library of Munich, Germany.
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    More about this item

    Keywords

    Gasoline demand Income and price elasticities Cointegration;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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