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Economic Crisis and Elasticities of Car Fuels: Evidence for Spain

Author

Listed:
  • Mohcine Bakhat

    (Economics for Energy)

  • José M. Labeaga

    (Economics for Energy and UNED)

  • Xavier Labandeira

    (Economics for Energy and Rede (Universidade de Vigo))

  • Xiral Lñpez

    (Economics for Energy)

Abstract

This paper provides an updated calculation of the price and income responsiveness of Spanish consumers of car fuels, with an explicit exploration of the effects of the current economic crisis. We examine separate gasoline and diesel demand models using a set of estimators, including generalized method of moments and bias-corrected dynamic fixed-effect models, on a panel of 16 Spanish regions over the 1999-2011 period. The paper confirms the persistence of rather low own-price elasticities both for diesel and gasoline and both in short and long runs. It also shows that the crisis has slightly increased the price elasticity of demand, with a higher effect on gasoline than on diesel. On the contrary, the crisis has hardly affected the income elasticity of car-fuel demand. These updated results are obviously relevant for the current Spanish debate on the design and implementation of energy, environmental, fiscal and distributional policies. Moreover, given the duration and extent of the Spanish economic crisis, our conclusions may be also interesting and useful from an international perspective.

Suggested Citation

  • Mohcine Bakhat & José M. Labeaga & Xavier Labandeira & Xiral Lñpez, 2013. "Economic Crisis and Elasticities of Car Fuels: Evidence for Spain," Working Papers fa15-2013, Economics for Energy.
  • Handle: RePEc:efe:wpaper:fa15-2013
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    References listed on IDEAS

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    More about this item

    Keywords

    diesel; gasoline; income; price; regions; panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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