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The Systemic, Long-run Relation among Gasoline Demand, Gasoline Price, Income, and Vehicle Ownership in OECD Countries: Evidence from Panel Cointegration and Causality Modeling

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  • Liddle, Brantley

Abstract

This paper analyzes gasoline consumption per capita, income (GDP per capita), gasoline price, and car ownership per capita for a panel of OECD countries by employing panel unit root and cointegration testing, panel Dynamic and Fully Modified OLS estimations, and panel Granger-causality tests. The four variables are determined to be panel I(1) and cointegrated. Estimated long-run and short-run income elasticities are smaller than what typically had been found previously. Lastly, gasoline consumption is Granger-caused by gasoline price, but not by car ownership or income; whereas, car ownership is Granger-caused by income and at the margin by gasoline consumption, but not by gasoline price.

Suggested Citation

  • Liddle, Brantley, 2012. "The Systemic, Long-run Relation among Gasoline Demand, Gasoline Price, Income, and Vehicle Ownership in OECD Countries: Evidence from Panel Cointegration and Causality Modeling," MPRA Paper 52081, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:52081
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    3. Zhao, Pengjun & Bai, Yu, 2019. "The gap between and determinants of growth in car ownership in urban and rural areas of China: A longitudinal data case study," Journal of Transport Geography, Elsevier, vol. 79(C), pages 1-1.
    4. Liddle, Brantley, 2013. "Population, Affluence, and Environmental Impact Across Development: Evidence from Panel Cointegration Modeling," MPRA Paper 52088, University Library of Munich, Germany.
    5. Bakhat, Mohcine & Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2017. "Elasticities of transport fuels at times of economic crisis: An empirical analysis for Spain," Energy Economics, Elsevier, vol. 68(S1), pages 66-80.
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    7. Curl, Angela & Clark, Julie & Kearns, Ade, 2018. "Household car adoption and financial distress in deprived urban communities: A case of forced car ownership?," Transport Policy, Elsevier, vol. 65(C), pages 61-71.
    8. Ben Jebli, Mehdi & Belloumi, Mounir, 2017. "Investigation of the causal relationships between combustible renewables and waste consumption and CO2 emissions in the case of Tunisian maritime and rail transport," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 820-829.
    9. Ben Jebli, Mehdi, 2015. "The Impact of Combustible Renewables and Waste Consumption and Transport on the Environmental Degradation: The Case of Tunisia," MPRA Paper 68038, University Library of Munich, Germany.
    10. Kakali Kanjilal & Sajal Ghosh, 2018. "Revisiting income and price elasticity of gasoline demand in India: new evidence from cointegration tests," Empirical Economics, Springer, vol. 55(4), pages 1869-1888, December.
    11. Scott, K. Rebecca, 2015. "Demand and price uncertainty: Rational habits in international gasoline demand," Energy, Elsevier, vol. 79(C), pages 40-49.
    12. Ulfarsson, Gudmundur F. & Steinbrenner, Anne & Valsson, Trausti & Kim, Sungyop, 2015. "Urban household travel behavior in a time of economic crisis: Changes in trip making and transit importance," Journal of Transport Geography, Elsevier, vol. 49(C), pages 68-75.
    13. Ming Zhong & Qi Tang & Xiaofeng Ma & John Douglas Hunt, 2019. "Scissors Difference of Socioeconomics, Travel and Space Consumption Behavior of Rural and Urban Households and Its Impact on Modeling Accuracy and Data Requirements," Sustainability, MDPI, vol. 11(19), pages 1-18, October.
    14. Brantley Liddle, 2017. "Accounting for Nonlinearity, Asymmetry, Heterogeneity, and Cross-Sectional Dependence in Energy Modeling: US State-Level Panel Analysis," Economies, MDPI, vol. 5(3), pages 1-11, August.
    15. Zimmer, Anne & Koch, Nicolas, 2017. "Fuel consumption dynamics in Europe: Tax reform implications for air pollution and carbon emissions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 22-50.
    16. Pang, Jindong & An, Lan & Shen, Shulin, 2023. "Gasoline prices, traffic congestion, and carbon emissions," Resource and Energy Economics, Elsevier, vol. 75(C).
    17. Liddle, Brantley & Lung, Sidney, 2015. "Revisiting energy consumption and GDP causality: Importance of a priori hypothesis testing, disaggregated data, and heterogeneous panels," Applied Energy, Elsevier, vol. 142(C), pages 44-55.
    18. Liddle, Brantley & Lung, Sidney, 2013. "The long-run causal relationship between transport energy consumption and GDP: Evidence from heterogeneous panel methods robust to cross-sectional dependence," Economics Letters, Elsevier, vol. 121(3), pages 524-527.
    19. Kyoung-Min Lim & Myunghwan Kim & Chang Seob Kim & Seung-Hoon Yoo, 2012. "Short-Run and Long-Run Elasticities of Diesel Demand in Korea," Energies, MDPI, vol. 5(12), pages 1-10, November.
    20. Dalia M. Ibrahiem, 2018. "Road energy consumption, economic growth, population and urbanization in Egypt: cointegration and causality analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(3), pages 1053-1066, June.
    21. Zhang, Chuanguo & Nian, Jiang, 2013. "Panel estimation for transport sector CO2 emissions and its affecting factors: A regional analysis in China," Energy Policy, Elsevier, vol. 63(C), pages 918-926.

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    More about this item

    Keywords

    gasoline demand elasticities; OECD countries; panel unit roots; panel cointegration; panel Dynamic OLS and Fully Modified OLS estimation; panel Granger-causality testing;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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