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Are US gasoline price adjustments asymmetric?

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  • B. Bhaskara Rao
  • Gyaneshwar Rao

Abstract

We use the LSE-Hendry general to specific approach to analyse if US gasoline price adjustments are asymmetric with respect to changes in crude oil prices. Furthermore, we modify some weaknesses in the earlier works by Borenstein et al. (1997) and Bachmeier and Griffin (2003) and shows that if the price adjustment equations are properly specified and estimated, alternative specifications and temporal aggregation of data do not affect the results. Monthly US data are used to show that alternative specifications give equally good results and there is no asymmetry in the US gasoline price adjustments.

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  • B. Bhaskara Rao & Gyaneshwar Rao, 2008. "Are US gasoline price adjustments asymmetric?," Applied Economics Letters, Taylor & Francis Journals, vol. 15(6), pages 443-447.
    • Handle: RePEc:taf:apeclt:v:15:y:2008:i:6:p:443-447
    DOI: 10.1080/13504850600706412
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    1. Granger, Clive W J, 1997. "On Modelling the Long Run in Applied Economics," Economic Journal, Royal Economic Society, vol. 107(440), pages 169-177, January.
    2. Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
    3. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 305-339.
    4. B Bhaskara Rao & Gyaneshwar Rao, 2005. "Crude Oil and Gasoline Prices in Fiji: Is the Relationship Asymmetric?," Microeconomics 0510004, University Library of Munich, Germany.
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    Cited by:

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    3. Economou, Fotini & Panagopoulos, Yannis & Tsouma, Ekaterini, 2018. "Uncovering asymmetries in the relationship between fear and the stock market using a hidden co-integration approach," Research in International Business and Finance, Elsevier, vol. 44(C), pages 459-470.
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    5. Chattopadhyay, Manojit & Kumar Mitra, Subrata, 2015. "Exploring asymmetric behavior pattern from Indian oil products prices using NARDL and GHSOM approaches," Energy Policy, Elsevier, vol. 86(C), pages 262-272.
    6. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
    7. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.
    8. Karagiannis, Stelios & Panagopoulos, Yannis & Vlamis, Prodromos, 2015. "Are unleaded gasoline and diesel price adjustments symmetric? A comparison of the four largest EU retail fuel markets," Economic Modelling, Elsevier, vol. 48(C), pages 281-291.
    9. Karagiannis, Stelios & Panagopoulos, Yannis & Vlamis, Prodromos, 2010. "Interest rate pass-through in Europe and the US: Monetary policy after the financial crisis," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 323-338, May.
    10. Szymon Wlazlowski & Monica Giulietti & Jane Binner & Costas Milas, 2011. "Price Transmission in the EU Wholesale Petroleum Markets," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(2), pages 165-172, January.
    11. Hamid Baghestani & Jorg Bley, 2020. "Do directional predictions of US gasoline prices reveal asymmetries?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(2), pages 348-360, April.
    12. Szymon Wlazlowski & Monica Giulietti & Jane Binner & Costas Milas, 2008. "Smooth Transition Models in Price Transmission," Working Paper series 04_08, Rimini Centre for Economic Analysis.

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    JEL classification:

    • P - Political Economy and Comparative Economic Systems
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Z - Other Special Topics

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