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Gasoline and Diesel Demand in Europe: New Insights

  • Pock, Markus

    (Department of Economics and Finance, HealthEcon, Institute for Advanced Studies, Vienna, Austria)

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    This study utilizes a panel data set from 14 European countries over the period 1990-2004 to estimate a dynamic model specification for gasoline and diesel demand. Previous studies estimating gasoline consumption per total passenger cars ignore the recent increase in the number of diesel cars in most European countries leading to biased elasticity estimates. We apply several common dynamic panel estimators to our small sample. Results show that specifications neglecting the share of diesel cars overestimate short-run income, price and car ownership elasticities. It appears that the results of standard pooled estimators are more reliable than common IV/GMM estimators applied to our small data set.

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    File Function: First version, 2007
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    Paper provided by Institute for Advanced Studies in its series Economics Series with number 202.

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    Length: 30 pages
    Date of creation: Jan 2007
    Date of revision:
    Handle: RePEc:ihs:ihsesp:202
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    3. Inge Mayeres & Stef Proost, 2000. "Should Diesel Cars in Europe be discouraged ?," Center for Economic Studies - Discussion papers ces0018, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
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    5. Maddala, G S, et al, 1997. "Estimation of Short-Run and Long-Run Elasticities of Energy Demand from Panel Data Using Shrinkage Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 90-100, January.
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    14. Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
    15. Baltagi, Badi H. & Griffin, James M., 1983. "Gasoline demand in the OECD : An application of pooling and testing procedures," European Economic Review, Elsevier, vol. 22(2), pages 117-137, July.
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    20. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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