IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/20008.html

Welfare Effects of Gas Price Fluctuations

Author

Listed:
  • Kuhn, Florian
  • Kehrig, Matthias
  • Ziebarth, Nicolas L.

Abstract

The share of gasoline consumption in household expenditures decreases with income, gasoline demand being least elastic for low-income households. Based on this empirical evidence for non-homotheticities, we develop a quantitative heterogeneous-agent general equilibrium model to quantify the distributional consequences of oil price shocks. Although oil price shocks have small aggregate effects, they hurt low-income households considerably with costs to lifetime utility two to three times larger for those in the bottom decile of income relative to those in the top decile. Additionally, the 2014/15 oil glut depressed gasoline prices, which delivered comparable welfare benefits to the 2018 tax cuts.

Suggested Citation

  • Kuhn, Florian & Kehrig, Matthias & Ziebarth, Nicolas L., 2025. "Welfare Effects of Gas Price Fluctuations," CEPR Discussion Papers 20008, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20008
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP20008
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:20008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.