Road accidents and business cycles in Spain
As of 2006 Spanish authorities implemented a Penalty Point System (PPS), consisting in a credit system for licensed drivers conditional upon the fulfillment of traffic rules. The PPS has been blessed as responsible for the decline of road fatalities in Spain. In this paper, we argue that part of the decline was due to the occurrence of two confluent facts that affect traffic density: (1st) the Great recession starting in 2008, and (2nd) an increase in fuel prices during the spring of 2008, implying a rise in the operating costs of motor vehicles. Using cointegration techniques, the GDP growth rate and the fuel price appear to be statistically significant with accidents. Importantly, PPS is found to be significant in reducing accidents with mortal victims. In view of these results, we conclude that road accidents in Spain are very sensible to the business cycle, and that the PPS influenced the quality (fatality) rather than the quantity of accidents in Spain.
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