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How Do Gasoline Prices Respond to a Cost Shock?

Author

Listed:
  • Erwan Gautier
  • Magali Marx
  • Paul Vertier

Abstract

In a broad class of sticky-price models, theory predicts that the kurtosis-to-frequency ratio of price changes is a sufficient statistic for the cumulative impulse response of prices (CIRP) to a nominal shock. Using several million daily gasoline prices in France, we provide supporting evidence of this prediction. The CIRP correlates with the kurtosis-to-frequency ratio, but also with both frequency and kurtosis taken separately. The sign and the magnitude of the correlations are fully in line with theoretical predictions. Other moments of the price change distribution do not correlate with the CIRP.

Suggested Citation

  • Erwan Gautier & Magali Marx & Paul Vertier, 2023. "How Do Gasoline Prices Respond to a Cost Shock?," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(4), pages 707-741.
    • Handle: RePEc:ucp:jpemac:doi:10.1086/727698
    DOI: 10.1086/727698
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    Cited by:

    1. Marine Adam & Odran Bonnet & Etienne Fize & Marion Rault & Tristan Loisel & Lionel Wilner, 2023. "How does fuel demand respond to price changes? Quasi-experimental evidence based on high-frequency data [L’ajustement de court terme de la consommation de carburant à des changements de prix. Des estimations menées à partir de données à haute fréq," Working Papers hal-05354063, HAL.
    2. Nicolas Forteza & Elvira Prades & Marc Roca, 2024. "Analysing the VAT Cut Pass-Through in Spain Using Web Scraped Supermarket Data and Machine Learning," Working papers 951, Banque de France.
    3. Nicolás Forteza & Elvira Prades & Marc Roca, 2025. "Analyzing VAT pass-through in Spain using web-scraped supermarket data and machine learning," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 16(1), pages 137-189, March.
    4. Ahn, JaeBin, 2025. "Greenflation or greensulation? The case of fuel excise taxes and oil price pass-through," Energy Economics, Elsevier, vol. 148(C).
    5. Bonnet, Odran & Fize, Étienne & Loisel, Tristan & Wilner, Lionel, 2025. "Compensating against fuel price inflation: Price subsidies or transfers?," Journal of Environmental Economics and Management, Elsevier, vol. 129(C).
    6. Mishel Ghassibe & Anton Nakov, 2025. "Business Cycles with Pricing Cascades," Working Papers 1525, Barcelona School of Economics.
    7. Bernardino, Tiago & Gabriel, Ricardo Duque & Quelhas, João & Silva-Pereira, Márcia, 2025. "The full, persistent, and symmetric pass-through of a temporary VAT cut," Journal of Public Economics, Elsevier, vol. 248(C).
    8. Erwan Gautier & Cristina Conflitti & Daniel Enderle & Ludmila Fadejeva & Alex Grimaud & Eduardo Gutiérrez & Valentin Jouvanceau & Jan-Oliver Menz & Alari Paulus & Pavlos Petroulas & Pau Roldan-Blanco , 2026. "Consumer price stickiness in the euro area during an inflation surge," Working Papers 2608, Banco de España.
    9. Dedola, Luca & Gautier, Erwan & Nakov, Anton & Santoro, Sergio & De Veirman, Emmanuel & Henkel, Lukas & Fagandini, Bruno, 2023. "Some implications of micro price-setting evidence for inflation dynamics and monetary transmission," Occasional Paper Series 321, European Central Bank.
    10. Odran Bonnet & Étienne Fize & Tristan Loisel & Lionel Wilner, 2024. "Is Carbon Tax Truly More Salient? Evidence from Fuel Tourism at the France-Germany Border," CESifo Working Paper Series 10918, CESifo.
    11. Alberto Cavallo & Francesco Lippi & Ken Miyahara, 2024. "Large Shocks Travel Fast," American Economic Review: Insights, American Economic Association, vol. 6(4), pages 558-574, December.
    12. Ho, Cheuk Yin, 2025. "Do sticky prices or sticky wages matter for monetary non-neutrality?," Economics Letters, Elsevier, vol. 251(C).

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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