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A Censored Regression Model Of Private Car Use

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  • Jong, G
  • Cramer, J

Abstract

We develop a model for the joint determination of private car ownership and private car use by households. To own a private car is not worth the cost unless permanent annual mileage exceeds a certain minimum; observed annual mileage however differs from permanent mileage because of transitory factors. This model calls for a nonzero Tobin threshold and for an unusual distribution of the disturbances. We estimate its parameters from the 1980 Dutch household budget survey and obtain satisfactory results. The threshold is about 7500 kilometers per year, and the overall income elasticity of mileage 0 .5 . We also estimate a variable threshold model. In this case the overall income elasticity is slightly higher. The estimates of the variable threshold model confirm the old idea which says that the higher incomes will have a lower threshold.

Suggested Citation

  • Jong, G & Cramer, J, "undated". "A Censored Regression Model Of Private Car Use," University of Amsterdam, Actuarial Science and Econometrics Archive 293121, University of Amsterdam, Faculty of Economics and Business.
    • Handle: RePEc:ags:amstas:293121
    DOI: 10.22004/ag.econ.293121
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    References listed on IDEAS

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    5. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, October.
    6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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