two stage budgeting and exact aggregation this paper presents an econometric model of demand for energy based on two stage budgeting the model provides own price and cross price elasticities of demand for energy and nonenergy commodities for the united states these elasticities are estimated separately for households classified by family size age of head region race and urban versus rural residence price elasticities are presented conditional on total energy expenditure and total expenditure on all commodities the model combines individual cross section data with aggregate time series data and is based on exact aggregation over individual demand functions

quantity aggregation in consumer demand analysis when physical quantities are observed a method for estimating price and income elasticities from cross section data devised by deaton 1986 1987 1988 makes implicit use of the hicks composite commodity theorem recognition of this fact allows theoretically rigorous definition of aggregate composite quantities a comparison of elasticities of hicks composite with elasticities of simple physical quantity measures for the ivory coast and the united states demonstrates that use of physical quantity measures can be severely misleading when commodity heterogeneity is substantial copyright 1990 by mit press

gasoline demand in europe new insights abstract this study utilizes a panel data set from 14 european countries over the period 1990 2004 to estimate a dynamic model specification for gasoline 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

aggregate investment in a business cycle model with adjustment costs abstract this paper explains the observed cyclical variability of aggregate investment and the counter movements with respect to its relative price in the us data using a stochastic growth model with adjustment costs the exogenous disturbances of the model represent preference shocks productivity innovations and changes on the relative price between consumption and investment goods simulations of the model imply that the volatility of those relative price innovations need to be three to four times larger than the standard solow residual innovations in order to match the model with the data

determinants of import demand for non renewable energy petroleum products empirical evidence from nigeria abstract this study estimated determinants of import demand for refined petroleum products in nigeria for the period 1984 2013 it employed the autoregressive distributed lag ardl bounds test cointegration method and analysed both long run and short run determinants of import demand for total and specific petroleum products in the long run aggregate and sectoral incomes are significant determinants of import of refined kerosene further real effective exchange rate reer aggregate income gdp manufacturing sector s income domestic energy production dep and population growth rate pgr are drivers of import of refined motor spirit moreover reer dep and manufacturing sector s income are propellers of import of refined distillate fuel also reer and total output of petroleum products are major drivers of total import of refined petroleum products short run results show that previous period gdp pgr and manufacturing and service sectors incomes are determinants of import demand for refined kerosene moreover reer gdp previous pgr and manufacturing sector s income exert significant effects on the import of refined motor spirit further significant effects of reer dep previous pgr domestic output of the product and manufacturing and service sectors incomes on the import demand for distillate fuel were found policy implications of the foregoing are articulated in the paper

assessing the rebound effect using a natural experiment setting evidence from the private transportation sector in israel subsidizing energy efficient technologies is considered by energy and environmental organizations to be one of the most effective policies for decreasing energy consumption in the transportation sector such policies are becoming ever more popular and have been implemented in a considerable number of countries in recent years because these policies promote energy efficient cars with lower usage costs they may rebound and increase the distances traveled by households that have switched to energy efficient cars from an econometric perspective a subsidization policy can be used as a valid instrument to identify the households choice of energy efficiency levels of the cars they own this identification in turn can be utilized to account for endogeneity in the estimation of a rebound effect the present study uses a natural experiment setting of such a policy implemented in israel in 2009 the empirical results indicate a fairly large average rebound effect of 40 the results also indicate that while the policy indeed encouraged the purchase of energy efficient cars households that bought a new or used car during the surveyed period did not generate a rebound effect of a different magnitude compared with other households that did not we discuss the implications of our findings

rebound effect in china evidence from the power generation sector abstract when talking about energy conservation rebound effect re is always concerned which defined as the increasing energy consumption relative to the counterfactual predicted by technological progress because of efficiency induced decrease in the real price of energy services in this paper we try to find a way to figure out the re through calculating the substitution relations accord with the definition based on the trans log cost function and considering the asymmetric impact on energy cost share equation the paper applies allen uzawa substitution elasticity to establish the price oriented analysis diagram of fossil energy consumption re using time series data applying the joint method of the dynamic ols dols and the seemingly unrelated regressions sur the re in china s electricity generation sector is estimated the results showed that the re is 11 6 in china s electricity generation sector if allowing for asymmetric price effects which indicates that china s power generation sector generally displays a feature of energy saving

intersectoral labor immobility sectoral comovement and news shocks sectoral comovement of output and hours worked is a prominent feature of business cycle data however most two sector neoclassical models fail to generate this sectoral comovement we construct and estimate a two sector neoclassical dynamic stochastic general equilibrium dgse model generating sectoral comovement in response to both anticipated and unanticipated shocks the key to our model s success is a significant degree of intersectoral labor immobility which we estimate using data on sectoral hours worked furthermore we demonstrate that imperfect intersectoral labor mobility provides a better explanation for the sectoral comovement than an alternative model emphasizing the role of labor supply wealth effects

the quantitative importance of news shocks in estimated dsge models we estimate a dynamic stochastic general equilibrium dsge model with several frictions and both unanticipated and news shocks using quarterly u s data from 1954 to 2004 and bayesian methods we find that unanticipated shocks dominate news shocks in accounting for the unconditional variance of output consumption and investment growth interest rate and the relative price of investment the unanticipated shock to the marginal efficiency of investment is the dominant shock accounting for over 45 of the variance in output growth news shocks account for less than 15 of the variance in output growth within the set of news shocks nontechnology sources of news dominate technology news with wage markup news shocks accounting for about 60 of the variance share of both hours and inflation we find that in the estimated dsge model i the presence of endogenous countercyclical price and wage markups due to nominal frictions substantially diminishes the importance of news shocks relative to a model without these frictions and ii while there is little change in the estimated contributions of technology news when we restrict wealth effects on labor supply the contributions of nontechnology news shocks are relatively more sensitive

edgeworth price cycles and intertemporal price discrimination in a retail gasoline market exhibiting edgeworth price cycles prices change asymmetrically with many small decreases interrupted by occasional large increases the result is a de facto menu of prices from which consumers can choose based on exactly when they buy this article introduces four classes of purchase timing strategies designed to systematically shift consumer purchases towards the cycle troughs it shows in the study market of toronto canada the monetary gains to consumers from optimized timing strategies are as high as 3 9 markups earned from these consumers fall up to 82 in spite of the gains from timing strategies surprisingly few consumers use them evidence is presented that a main reason is that consumers are not well informed about the cycles policy implications are discussed

international income inequality measuring ppp bias by estimating engel curves for food there are large differences between rich and poor people in the world this is of major concern to economists as well as to policy makers the magnitude of the dif ferences however depends on the measure used for comparisons to illustrate per capita income in china is more than five times larger if one uses penn world table pwt 1 incomes rather than exchange rate based ex incomes in this paper we study pwt incomes which aim at correcting for price level dif ferences across countries and identify the bias in them by estimating engel curves for food furthermore we study the relationship between the bias and the income of a country the pwt produces purchasing power parity ppp adjusted incomes and thus the associated bias is referred to as the ppp bias having estimated the bias in pwt incomes we provide new estimates of real income and refer to these as the engel curve ec incomes by comparing the estimated ec incomes and the pwt incomes the issue of how the bias influences estimated inequality is discussed finally we discuss whether ex incomes which simply transform each country s nominal income into one common currency provide better estimates of income than do pwt incomes this paper reports three main findings first there is substantial and systematic ppp bias in the pwt incomes the poorer the country the more its income tends to be overestimated 2 second the ppp bias causes a substantial and robust underesti mation of international inequality the gini index increases substantially when one adjusts for the bias third whereas pwt incomes provide better estimates than the ex incomes for the richer countries the ex incomes which implicitly assume that ppp holds provide better estimates for the poorer countries as we know that price levels differ across countries there is consensus that the seminal work on establishing the pwt was a well founded initiative and the data have been extensively used 3 still although many studies rely on pwt data few focus on the ppp bias in this dataset some contributors focus on one component of the bias however the so called substitution bias and use macro data to measure this

distributional and efficiency impacts of increased us gasoline taxes we examine the impacts of increased us gasoline taxes in a model that links the markets for new used and scrapped vehicles and recognizes the consider able heterogeneity among households and cars household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled we find that each cent per gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0 2

elasticities of demand for gasoline in canada and the united states abstract fluctuations in the world price of oil the concern with greenhouse gas emissions and the efforts to revive the 1997 kyoto protocol have resulted in renewed interest in the estimation of elasticities of demand for gasoline in this paper a complete system of demand equations is estimated including an equation for the demand for gasoline canadian family expenditure famex and united states consumer expenditure cex survey data are used household level data permits estimation of elasticities for various household groups also differences in demand responsiveness to own price and income changes are estimated for different regions in canada and the united states demand is found to be own price and income inelastic on the whole as reported in earlier studies there is also variation in these elasticities across regions of canada and the united states however larger differences are observed with respect to household size and housing tenure than to region of residence

short run and long run elasticities of import demand for crude oil in turkey abstract the aim of this study is to attempt to estimate the short run and the long run elasticities of demand for crude oil in turkey by the recent autoregressive distributed lag ardl bounds testing approach to cointegration as a developing country turkey meets its growing demand for oil principally by foreign suppliers thus the study focuses on modelling the demand for imported crude oil using annual data covering the period 1980 2005 the bounds test results reveal that a long run cointegration relationship exists between the crude oil import and the explanatory variables nominal price and income but not in the model that includes real price in domestic currency the long run parameters are estimated through a long run static solution of the estimated ardl model and then the short run dynamics are estimated by the error correction model the estimated models pass the diagnostic tests successfully the findings reveal that the income and price elasticities of import demand for crude oil are inelastic both in the short run and in the long run

gasoline taxes or efficiency standards a heterogeneous household demand analysis abstract using detailed consumer expenditure survey data and a flexible semiparametric dynamic demand model this paper estimates the price elasticity and fuel efficiency elasticity of gasoline demand at the household level the goal is to assess the effectiveness of gasoline taxes and vehicle fuel efficiency standards on fuel consumption the results reveal substantial interaction between vehicle fuel efficiency and the price elasticity of gasoline demand the improvement of vehicle fuel efficiency leads to lower price elasticity and weakens consumers sensitivity to gasoline price changes the offsetting effect also differs across households due to demographic heterogeneity these findings imply that when gasoline taxes are in place tightening efficiency standards will partially offset the strength of taxes on reducing fuel consumption

estimation with censored regressors basic issues we study issues that arise for estimation of a linear model when a regressor is censored we discuss the efficiency losses from dropping censored observations and illustrate the losses for bound censoring we show that the common practice of introducing a dummy variable to correct for censoring does not correct bias or improve estimation we show how censored observations generally have zero semiparametric information and we discuss implications for estimation we derive the likelihood function for a parametric model of mixed bound independent censoring and apply that model to the estimation of wealth effects on consumption

an alternative to steady state comparisons in perfect foresight models abstract this note examines a technique for the computation of the welfare impact of a pertubation of the steady state in a typical perfect foresight model the major innovation is the ability to analyze non stationary perturbations

car buyers and fuel economy abstract this research is designed to help researchers and policy makers ground their work in the reality of how us consumers are thinking and behaving with respect to automotive fuel economy our data are from semi structured interviews with 57 households across nine lifestyle sectors we found no household that analyzed their fuel costs in a systematic way in their automobile or gasoline purchases almost none of these households track gasoline costs over time or consider them explicitly in household budgets these households may know the cost of their last tank of gasoline and the unit price of gasoline on that day but this accurate information is rapidly forgotten and replaced by typical information one effect of this lack of knowledge and information is that when consumers buy a vehicle they do not have the basic building blocks of knowledge assumed by the model of economically rational decision making and they make large errors estimating gasoline costs and savings over time moreover we find that consumer value for fuel economy is not only about private cost savings fuel economy can be a symbolic value as well for example among drivers who view resource conservation or thrift as important values to communicate consumers also assign non monetary meaning to fuel prices for example seeing rising prices as evidence of conspiracy this research suggests that consumer responses to fuel economy technology and changes in fuel prices are more complex than economic assumptions suggest the us department of energy and the energy foundation supported this research the authors are solely responsible for the content and conclusions presented

separation of powers and the tax level in the u s states we estimate a nonlinear and discontinuous relationship between the tax level and the degree of alignment between the legislature and the governor measured as the number of seats in the legislature that belong to the governor s party in the states with the line item veto the tax level jumps at the point where the government switches from divided to unified with a regression discontinuity design we show that this jump can be interpreted as a causal effect we propose a simple model to account for this nonlinear relationship the sequential nature of the budget bargaining game that is the legislature proposes and the governor cuts with the line item veto implies that the tax level is determined by the overlap between the supporters of the governor and the supporters of the legislative majority changes in the size of the overlap determine the tax level

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

a decomposition of the price and income elasticity of the consumer demand for gasoline the authors specify and estimate a model of the short run demand for gasoline which allows them to decompose a consumer s gasoline demand elasticities into miles driven and driving efficiency components their model is estimated using detailed household survey data which allows direct focus on the short run holding both the household s automobile stock and demographic profile fixed among the most interesting results are 1 the data allow interesting insights to be drawn into the interrelationship between these important variables and household behavior with respect to gasoline consumption miles driven and driving efficiency 2 the gasoline demand behavior of one car and multi car households differ significantly from each other evaluated at overall sample means one car households have higher in absolute value price elasticites for gasoline miles driven and fuel efficiency demand conversely multi car households have higher in absolute value total expenditure elasticities for each category 3 for both one car and multi car households roughly 75 of the estimated price elasticity and roughly 80 of the estimated total expenditure elasticity of gasoline demand stem from the miles driven component the estimated fuel efficiency elasticities though smaller than their standard errors indicate that households respond to changes in prices and total expenditure levels not only by changing the number of miles theymore drive but also by changing the efficiency with which they drive them 23 references 3 tables less

heterogeneity in the response to gasoline prices evidence from pennsylvania and implications for the rebound effect abstract the consumer response to changing gasoline prices has long interested economists and policymakers for it has important implications for the effects of gasoline taxation and vehicle energy efficiency policies this study examines both the elasticity of driving with respect to changing gasoline prices and heterogeneity in this elasticity by geography the fuel economy of the vehicle and the age of the vehicle we use detailed annual vehicle level emissions inspection test data from pennsylvania that include odometer readings inspection zip codes and extensive vehicle characteristics we estimate a short run gasoline price elasticity of driving demand of 0 10 and find substantial heterogeneity in this responsiveness the elasticity is largely driven by low fuel economy vehicles as well as vehicles between 3 and 7 years old our findings help reconcile some of the recent literature and provide guidance on the magnitude of the direct rebound effect from light duty vehicle energy efficiency policies

a varying coefficient approach to global flexibility in demand analysis a semiparametric approximation to reduce dimensionality issues this article derives a globally flexible demand system that can be estimated non parametrically with a specially devised temporal kernel statistical and economic results from a meat demand application underscores the usefulness of a temporal kernel in globally approximating an integrable demand system

understanding expectation driven fluctuations a labor market approach this paper presents a uni ed analysis of neoclassical models that can generate expectation driven business cycles under anticipated future technology shocks or news shocks it shows that the ability or inability of various rbc models to generate positive comovement of aggregate variables hinges crucially on the structure of the labor market equilibrium the analysis provides a simple and intuitive guide to understanding the existing literature and to searching for new models that can explain the data under news shocks

the role of intratemporal adjustment costs in a multisector economy abstract in this paper we construct a multisector business cycle model which is capable of reproducing the procyclical behavior of cross sector measures of capital employment and output we start by documenting the difficulty that a standard variant of a conventional real business cycle model has in accounting for these facts we then show how the introduction of intratemporal adjustment costs for investment can significantly enhance the performance of such a model these costs make it difficult to alter the composition of production of new capital goods the presence of these costs eliminates many counterfactual observations of the model that would otherwise be present the dynamic response of variables in the model is different from what one would observe in the standard one sector model we also examine the implications of imposing intratemporal adjustment costs for labor the model can also account for the cross sector behavior of employment observed in the data

rebound effect of efficiency improvement in passenger cars on gasoline consumption in canada abstract the fossil fuel driven transport sector has been one of the major contributors to co2 emission across the world keeping it on the energy policy agenda for the past three decades canada ranks second in gasoline consumption among oecd countries and canadian gasoline expenditure share has been increasing since the 1990s fuel efficiency policies aim to decrease gasoline consumption however the effect can be mitigated by changes in consumer behavior such as traveling more distances a rebound effect thus the effectiveness of fuel efficiency policy is dependent on the magnitude of the rebound effect in this paper we estimate the rebound effect for personal transportation in canada using data from the household spending survey for the period 1997 2009 the model includes a system of expenditure share equations for gasoline other energy goods and non energy goods specified by aids and quaids models and estimated by the nonlinear sur method our estimation results show a rather high average rebound effect of 82 88 but with significant heterogeneity across income groups provinces and gasoline prices specifically the rebound effect ranges from 63 to 96 across income groups and provinces and increases with gasoline prices

modeling physical quantities of food and nutrients consumed from aggregate data with an application to finland anticipating the impact of changes in economic incentives on dietary quality and nutritional health requires knowledge of how physical quantities of food consumed respond to price and income variations a problem arises however because physical quantities are 1 not consistent aggregates in demand models and 2 not measured at final retail level in national statistics the article develops a solution by establishing explicitly the theoretical link between composite demand and physical quantities from which a novel empirical approach to the estimation of nutrient elasticities is derived it is applied to finnish aggregate data from the national accounts and food balance sheets over the 1975 2006 period and the results are used to assess the potential effectiveness of several incentive based nutritional policy instruments jel classifications i10 q11 q18

when can changes in expectations cause business cycle fluctuations in neo classical settings abstract it is often argued that changes in expectation are an important driving force of the business cycle however it is well known that changes in expectations cannot generate positive co movement between consumption investment and employment in the most standard neo classical business cycle models this gives rise to the question of whether changes in expectation can cause business cycle fluctuations in any neo classical setting or whether such a phenomenon is inherently related to market imperfections this paper offers a systematic exploration of this issue our finding is that expectation driven business cycle fluctuations can arise in neo classical models when one allows for a sufficiently rich description of the production technology however such a structure is rarely allowed or explored in macro models in particular we identify a multi sector setting and a setting with a costly distribution system in which expectation driven business cycles can arise

2 00 gas studying the effects of a gas tax moratorium there are surprisingly few estimates of the effects of sales taxes on retail prices especially at the firm level we consider the temporary suspension and subsequent reinstatement of the gasoline sales tax in illinois and indiana following a price spike in 2000 earlier laws set the timing of the reinstatements providing plausibly exogenous changes in the tax rates using a unique dataset of daily prices at the gas station level 70 of the tax suspension is passed on to consumers in the form of lower prices while 80 100 of the tax reinstatements are passed on to consumers some evidence suggests that these short run pass through estimates are smaller near the state borders with the tax reinstatements associated with relatively higher prices up to an hour s drive into neighboring states

empirical assessment of the determinants of road energy demand in greece this paper attempts to cast light on the determinants of road energy demand in greece for this purpose we used cointegration techniques and vector autoregression var analysis in order to capture short run and long run dynamics for gasoline and diesel demand respectively from the empirical analysis that covers the period 1978 2003 we find that in the long run gasoline energy demand appears to be price and income inelastic while diesel demand appears to be price inelastic and income elastic we also found that the absence of close substitutes in the road sector denotes the low level of energy switching in greece

validating energy oriented cge models although cge models have received heavy usage they are often criticized as being insufficiently validated key parameters are often not econometrically estimated and the performance of the model as a whole is rarely checked against historical outcomes as a consequence questions frequently arise as to how much faith one can put in cge results in this paper we employ a novel approach to the validation of a widely utilized global cge model gtap e by comparing the variance of model generated petroleum price distributions driven by historical demand and supply shocks to the model with observed five year moving average price distributions we conclude that energy demand in gtap e is far too price elastic over this time frame after incorporating the latest econometric estimates of energy demand and supply elasticities we revisit the validation question and find the model to perform more satisfactorily as a further check we compare a deterministic global general equilibrium simulation based on historical realizations over the 2001 2006 period during which petroleum prices rose sharply along with growing global energy demands as anticipated by the stochastic simulations the revised model parameters perform much better than the original gtap e parameters in this global general equilibrium context

marginal reductions in vehicle emissions under a dual blend ethanol mandate evidence from a natural experiment among the many reasons policy makers across the world have sought to supplement fuel supplies with ethanol blended fuels are the cited environmental benefits that come with replacing a fossil fuel with a cleaner burning alternative dual blend ethanol mandates in which multiple ethanol blends are simultaneously available are one way policy markers can move forward with more aggressive mandates more quickly the recent ethanol mandate in the state of new south wales australia offers a unique natural experiment to quantify the potential environmental benefits and costs of a dual blend ethanol policy this paper estimates the impact on carbon dioxide co2 emissions from road activity that are attributable to the implementation of the new south wales ethanol requirements we find that there was a decrease in emissions due to the policy but that the decrease is relatively minor given the size of the market and that it comes at a high cost the cost was over 1200 per ton of carbon to reduce gasoline emissions by just 1 2

cointegration and the demand for gasoline since the early 1970s there has been a worldwide upsurge in the price of energy and in particular of gasoline therefore demand functions for energy and its components like gasoline have received much attention however since confidence in the estimated demand functions is important for use in policy and forecasting following amarawickrama h a hunt l c 2008 electricity demand for sri lanka a time series analysis energy economics 33 724 739 this paper estimates the demand for gasoline is estimated with five alternative time series techniques with data from fiji estimates with these alternative techniques are very close and thus increase our confidence in them we found that gasoline demand is both price and income inelastic

fiscal foresight and information flows news or foresight about future economic fundamentals can create rational expectations equilibria with non fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react using tax policies as a leading example of foresight simple theory makes transparent the economic behavior and information structures that generate non fundamental equilibria econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes biases are quantitatively important when two canonical theoretical models are taken as data generating processes both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non uniqueness problem endemic to moving average representations

household adjustment to gasoline price change an analysis using 9 years of us survey data this paper examines the dynamics and composition of household adjustment to changes in the real price of gasoline using a panel of us households by decomposing the demand for gasoline into the demand for vehicle miles traveled and the demand for household composite miles per gallon we are able to add rich detail to the description of how households respond to gasoline price changes while obtaining total price elasticity estimates well within the range found in the literature we find that consumers initially respond to a price rise with a much larger decrease in consumption than would be indicated by the total elasticity in addition households respond to price changes by adjusting vehicle miles traveled more than composite miles per gallon in the year after a price change

the demand for gasoline evidence from household survey data summary in this paper we investigate the demand for gasoline in canada using recent annual expenditure data from the canadian survey of household spending over a 13 year period from 1997 to 2009 on three expenditure categories in the transportation sector gasoline local transportation and intercity transportation in doing so we use three of the most widely used locally flexible functional forms the almost ideal demand system aids of deaton and muellbauer 1980 the quadratic aids quaids of banks et al 1997 an extension of the simple aids model that can generate quadratic engel curves and the minflex laurent model of barnett 1983 which can also generate quadratic engel curves we pay explicit attention to economic regularity argue that unless regularity is attained by luck flexible functional forms should always be estimated subject to regularity as suggested by barnett 2002 and impose local curvature to produce inference consistent with neoclassical microeconomic theory our findings indicate that the curvature constrained minflex laurent model is the only model that is able to provide theoretically consistent estimates of the canadian demand for gasoline our estimates show that the own price elasticity for gasoline demand in canada is between 0 738 and 0 570 less elastic than previously reported in the literature copyright 2013 john wiley sons ltd

nonparametric estimation of a nonseparable demand function under the slutsky inequality restriction we present a method for consistent nonparametric estimation of a demand function with nonseparable unobserved taste heterogeneity subject to the shape restriction implied by the slutsky inequality we use the method to estimate gasoline demand in the united states the results reveal differences in behavior between heavy and moderate gasoline users they also reveal variation in the responsiveness of demand to plausible changes in prices across the income distribution we extend our estimation method to permit endogeneity of prices the empirical results illustrate the improvements in finite sample performance of a nonparametric estimator from imposing shape restrictions based on economic theory

the analytics of technology news shocks abstract this paper constructs several models in which unlike the standard neoclassical growth model positive news about future technology generates an increase in current consumption hours and investment these models are said to exhibit procyclical news shocks we find that all models that exhibit procyclical news shocks in our paper have two commonalities there are mechanisms to ensure that i consumption does not crowd out investment or vice versa ii the benefit of forgoing leisure in response to news shocks outweighs the cost among the models we consider we believe one model holds the greatest potential for explaining procyclical news shocks its critical assumption is that news of the future technology also illuminates the nature of this technology this illumination in turn permits economic actors to invest in capital that is forward compatible i e adapted to the new technology on the technical side our paper reintroduces the laplace transform as a tool for studying dynamic economies analytically using laplace transforms we are able to study and prove results about the full dynamics of the model in response to news shocks

consumer and competitor reactions evidence from a field experiment abstract in response to a price change by a single seller it is common for the density of sellers in the market to influence both the quantity response of consumers and the price response of other sellers using field experiment data collected around a series of exogenously imposed price changes we find that an individual retailer with a larger number of competitors faces a more responsive demand this finding is fundamental to a predicted inverse relationship between market prices and the number of competitors we also examine the reaction of rival stations to exogenous price changes and find that the magnitude of a competitor s response is inversely related to the density of stations in the market

modeling gasoline demand in the united states a flexible semiparametric approach abstract the focus of this paper is on the modeling and estimation of quarterly state level gasoline demand in the united states the existing literature may not appropriately evaluate the price elasticity and income elasticity of gasoline demand most studies fail to address the possible heterogeneity in gasoline demand elasticities that may arise from a variety of sources the endogeneity issue of gasoline price has remained redundant throughout the literature i address these challenges using a flexible demand model and a recently developed estimation technique the econometric approach allows for functional coefficients to accommodate the heterogeneity in demand elasticities several instrumental variables are used to investigate the endogeneity of gasoline price the estimation results provide strong evidence of heterogeneous gasoline demand elasticities across states and over time some state level attributes along with income and macroeconomic shocks are the potential sources of heterogeneity

a bayesian sampling approach to measuring the price responsiveness of gasoline demand using a constrained partially linear model partial linear models provide an intuitively appealing way to examine gasoline demand because one can examine how response to price varies according to the price level and people s income however despite their intuitive appeal partial linear models have tended to produce implausible and or erratic price effects blundell et al 2012 propose a solution to this problem that involves using slutsky shape restrictions to improve the precision of the nonparametric estimate of the demand function they propose estimating a constrained partially linear model through three steps where the weights are optimized by minimizing an objective function under the slutsky constraint bandwidths are selected through least squares cross validation and linear coefficients are estimated using profile least squares a limitation of their three step estimation method is that bandwidths are selected based on pre estimated parameters we improve on the blundell et al 2012 solution in that we derive a posterior and develop a posterior simulation algorithm to simultaneously estimate the linear coefficients bandwidths in the kernel estimator and the weights imposed by the slutsky condition with our proposed sampling algorithm we estimate a constrained partially linear model of household gasoline demand employing household survey data for the united states for 1991 and 2001 and for canada for 2006 2009 and find plausible price effects

elasticities of gasoline demand in switzerland abstract using cointegration techniques we investigate the determinants of gasoline demand in switzerland over the period 1970 2008 we obtain a very weak price elasticity of 0 09 in the short run and 0 34 in the long run for fuel demand i e gasoline plus diesel the corresponding price elasticities are 0 08 and 0 27 our rich dataset allows working with quarterly data and with more explicative variables than usual in this literature in addition to the traditional price and income variables we account for variables like vehicle stocks fuel prices in neighbouring countries oil shocks and fuel taxes all of these additional variables are found to be significant determinants of demand

the effect of population density road network density and congestion on household gasoline consumption in u s urban areas abstract this paper applies both semiparametric and parametric approaches to explore the effect of population density freeway road density and congestion on household gasoline consumption in u s urban areas while controlling for household demographic and economic characteristics regression results indicate that households living in those urban areas with higher freeway densities higher levels of congestion or lower population densities consume more gasoline

models and their uses it is argued that economists ought to recognize that modeling in different styles will be appropriate for different purposes or different stages in the development of an area of economics as an example the paper displays simulations of a stochastic general equilibrium model which shed light on the interpretation of widely discussed small macroeconomic vector autoregressive models connecting monetary variables to output and prices this abstract was borrowed from another version of this item

rational habits in gasoline demand abstract the dynamics of demand for energy goods such as gasoline are complicated by investment decisions and behavioral habits both types of complication can be captured by a habits model in which past consumption enters into an agent s current utility function if the agent is forward looking or rational then habits imply his consumption of the habit forming good will be sensitive to his expectation of future market conditions in particular future prices this sensitivity implies in turn that traditional measures of price elasticity will underproject consumers responsiveness to policy interventions this paper examines the implications of rational habits on gasoline demand using a simple model encompassing myopic and rational habits i demonstrate that an agent with rational habits will respond to anticipated future price changes and react more strongly to permanent than to temporary price changes with this distinction increasing in the strength of the habit i then estimate several habits models using panel data on u s states for the years 1989 through 2008 my preferred specification yields evidence of rational habits and moreover i find consumers to be twice as responsive to tax driven price changes as to market driven price changes taxes and other policies that operate through the gasoline price are a more powerful policy instrument than traditional price elasticity would lead us to believe

use of region life cycle and role variables in the short run estimation of the demand for gasoline and miles travelled short run demand for miles travelled and gasoline consumed are estimated for population subgroups defined by region occupation and life cycle understanding and quantifying the different responses of subgroups to changes in income and gasoline price are important from the perspective of transport and energy policies micro data are used to investigate the effects of marginal changes in price and income among sociodemographic groups this paper demonstrates that there are significant differences in the estimated parameters between the general population and subgroups within the population further significant differences may be demonstrated between those subgroups

estimating the distribution of welfare effects using quantiles this paper proposes a framework to model empirically welfare effects that are associated with a price change in a population of heterogeneous consumers which is similar to hausman and newey 1995 but allows for more general forms of heterogeneity individual demands are characterized by a general model which is nonparametric in the regressors as well as monotonic in unobserved heterogeneity in this setup we first provide and discuss conditions under which the heterogeneous welfare effects are identified and establish constructive identification we then propose a sample counterpart estimator and analyze its large sample properties for both identification and estimation we distinguish between the cases when regressors are exogenous and when they are endogenous finally we apply all concepts to measuring the heterogeneous effect of a chance of gasoline price using us consumer data and find very substantial differences in individual effects across quantiles

measuring consumer welfare with mean demands the welfare change from a price increase for example the compensating variation cv is often calculated using the expenditure function from an estimated demand if there is unobserved preference heterogeneity then the estimated demand is an average over households with different preferences and the cv from the mean demand does not generally equal the mean cv we give conditions ensuring that the cv from the mean demand equals the mean cv is less than the mean cv and approximates the mean cv better than the change in consumers surplus a necessary condition is that demands become more dispersed as income rises

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

analysing gasoline demand elasticities a survey this paper is a survey of studies on gasoline demand although there are very many dxerent studies in this eld which sometimes appear to arrive at contradictory results we find that with proper stratification of studies by model and data type much of the contict turns to consensus in this survey we classtfy studies by data type and by ten d erent categories of model and with the exception of estimates on seasonal data which tend to be unstable and of certain inappropriate model formulations we find a fair degree of agreement concerning average short run and even long run income and price elasticities

motor fuel taxation energy conservation and economic development a regional approach abstract combustion of motor fuels has a variety of environmental impacts on local regional and global scales taxing motor fuels more heavily would mitigate those environmental impacts however many governments are reluctant to increase motor fuel taxes because they fear that the tax incidence will be regressive and that economic development will be impeded using data for the new england region of the united states this paper argues that an oil importing region can conserve energy avoid regressive impacts and encourage economic development by taxing motor fuels more heavily and rebating the incremental revenues to owners of motor vehicles

elasticities of transport fuels at times of economic crisis an empirical analysis for spain abstract this paper provides an updated calculation of the price and income responsiveness of spanish consumers of transport fuels with an explicit exploration of the effects of the recent economic crisis we examine separate gasoline and diesel demand models using a set of estimators on a panel of 16 spanish regions over the period 1999 2015 the paper confirms the persistence of low own price elasticities both for diesel and gasoline in the short and long runs it also shows that the crisis of 2008 2013 slightly increased the price elasticity of demand for transport fuels with a higher effect on diesel than on gasoline by contrary the crisis slightly reduced the income elasticity of transport fuel demand given the intensity and length of the economic recession in spain the results of this paper may be useful to anticipate the effects of domestic public policies that impact transport fuel prices as well as to advance some of the potential consequences of crises elsewhere

news driven business cycles insights and challenges there is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations the news view of business cycles offers a formalization of this perspective in this paper we discuss mechanisms by which changes in agents information due to the arrival of news can cause business cycle fluctuations driven by expectational change and we review the empirical evidence aimed at evaluating their relevance in particular we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established jel d83 d84 e13 e32 o33

revealed and stated preferences for co2 emissions reduction the missing link abstract in this paper we combine data collected from two strands of literature dealing with revealed preferences expressed by conventional vehicle drivers for fuel price variation and stated preferences expressed by consumers for alternative fuel vehicles we employ a meta analysis approach drawing data on 30 primary studies reflecting two important policy interventions which are fuel price taxation and subsidies for alternative fuel vehicles this is a new contribution in environmental and energy economics in that we rescale all primary information into a unique index which captures consumers economic attitude towards carbon dioxide co2 emission reduction in monetary terms focusing on the transport sector we compute the implicit price for the avoidance of a kilogram of co2 emissions named pco2 explaining the existing heterogeneity from several points of view the results of the meta analysis show that contextual and individual characteristics influence the implicit price for co2 emissions avoidance this implicit price is on average positive in the case of revealed preferences studies whereas it is negative in the stated preferences studies although there are some important geographical differences our results show that fuel taxes could be an important additional instrument for environmental policy

household gasoline demand in the united states supported by the mit center for energy and environmental policy research the u s dept of energy and the national science foundation

an exploration into pigou s theory of cycles abstract this paper explores a theory of business cycles in which recessions and booms arise due to difficulties encountered by agents in properly forecasting the economy s future needs in terms of capital the idea has a long history in the macroeconomic literature as reflected by the work of pigou industrial fluctuation macmillan london 1926 the contribution of this paper is twofold first we illustrate the type of general equilibrium structure that can give rise to such phenomena second we examine the extent to which such a model can explain the observed pattern of u s recessions frequency depth without relying on technological regress we argue that such a model offer a framework for understanding elements of both the recent u s recession and of the asia downturns of the late 1990s

the rank and model specification of demand systems an empirical analysis using united states microdata a rank three demand system is estimated with united states consumer expenditure survey microdata a unique price data set is also used which permits the analysis of effects of systematic errors in price variables it is found that errors in price variables bias test results for the rank three hypothesis in particular towards rejection other test results are affected to a lesser extent estimating smaller systems of demand equations even when conditioning on excluded goods yields significantly different results another important conclusion is that model specification is statistically significantly different for households of varying family sizes and housing tenure statuses jel classifications c31 d12 le rang et la specification du modele des systemes de demande une analyse empirique utilisant des microdonnees americaines on calibre un systeme de demande de rang trois a l aide de microdonnees americaines tirees de la united states consumer expenditures survey un ensemble unique de prix est utilise afin de permettre l analyse des effets d erreurs systematiques dans les variables de prix il appert que les erreurs dans les variables de prix distorsionnent les resultats du test de l hypothese de rang trois en faveur d un rejet d autres resultats de tests sont affectes a un moindre degre si l on calibre de plus petits systemes d equations de demande meme en posant des conditions sur des biens exclus des resultats qui different de maniere significative s ensuivent une autre conclusion importante est que la specification du modele est differente de maniere statistiquement significative pour les menages selon la taille de la famille et le statut domiciliaire

demographic effects in demand analysis estimation of the quadratic expenditure system using microdata the purpose of this paper is to estimate a complete theoretically plausible system of demand equations on microdata using the rich detail of these data to investigate the impact of demographic variables on demand behavior the system which we estimate is the quadratic expenditure system qes introduced by howe pollak and wales we evaluate four methods for incorporating demographic variables into the demand system three of these procedures imply parameter restrictions while the fourth does not tests on the restrictions imply that for our data unrestricted estimation yields significantly greater explanatory power

news shocks and business cycles abstract this paper proposes and implements a novel structural var approach to the identification of news shocks about future technology the news shock is identified as the shock orthogonal to the innovation in current utilization adjusted tfp that best explains variation in future tfp a favorable news shock leads to an increase in consumption and decreases in output hours and investment on impact more suggestive of standard dsge models than of recent extensions designed to generate news driven business cycles though news shocks account for a significant fraction of output fluctuations at medium frequencies they contribute little to our understanding of recessions

effects of us biofuel policies on us and world petroleum product markets with consequences for greenhouse gas emissions abstract us biofuel policy includes greenhouse gas reduction targets regulators do not address the potential that biofuel policy can have indirect impacts on greenhouse gases through its impacts on petroleum product markets and scientific research only partially addresses this question we use economic models of us biofuel and agricultural markets and us and world petroleum and petroleum product markets to show that discontinuing biofuel tax credits and ethanol tariff lower biofuel use could lead to increased us petroleum product use and a reduction in petroleum product use in other parts of the world the net effect is lower greenhouse gas emissions under certain assumptions we show that biofuel use mandate elimination can have positive or negative impacts on greenhouse gas emissions the magnitude and the direction of effects depend on how us biofuel trade affects biofuel in other countries with different emissions context that determines how important use mandates are in the first place who pays mandate costs and the price responsiveness of global petroleum supplies and uses however our results show that counter intuitive effects are possible and discourage broad conclusions about the greenhouse gas impacts of removing these elements of us biofuel policy

overaccumulation interest and prices an emerging view of business cycles from the news shock literature suggests that recessions may occur when agents depress their demand for new capital upon the realization that they have accumulated too much conditional on current information in this paper i use a new keynesian model with a financial accelerator to study the behaviour of interest and prices under both a technology boom bust driven by changes in expectation about tfp and a credit boom bust driven by changes in expectations about the efficiency of the financial sector while the two scenarios are similar in that they both lead to a run up and then sharp drop off in new capital and debt i show that the behaviour of interest and prices depends critically on the nature of the new shock driving the overaccumulation in particular the boom phase of the tfp boom bust is characterized by below trend inflation or deflation whereas that of the credit boom bust is characterized by above trend but low inflation in contrast inflation falls below trend in the bust phases of both i show that consistent with results elsewhere in the literature stricter inflationtargeting fails to pull the economy toward the efficient equilibrium during the boom phase of the tfp boom bust in contrast stricter inflation targeting pushes the economy closer to the flexible price response during the boom phase of the credit boom bust in both cases however conditional on realization of overaccumulation inflation targeting pulls the economy towards the flexible price equilibrium

estimating the demand for gasoline in developing countries senegal abstract this paper estimates the aggregate demand for gasoline in senegal from 1970 to 2008 the long term and short term elasticities of demand with respect to gasoline prices and income are of paramount interest in this study in senegal rising food prices unemployment and shortage of electric supply are always associated with the spiking cost of world oil prices to understand the external shocks of world oil price and demand for gasoline in senegal this study tested a log linear model against the linear model of the demand for oil function with lagged dependent variables as an explanatory variable here the linear specification of the demand for oil is rejected in this study in favor of the log linear the natural log transformation is typical when using high frequency data and significantly reduces skewness and kurtosis generally in this study i found that short run elasticity is smaller than long run elasticity and gasoline demand is inelastic with respect to both price and income for both the short and long runs in senegal this is why researcher like moosa posits that this assertion can be rationalised on the grounds that oil is such an important commodity that does not have close substitutes at least for its uses 1998 p 3

a semiparametric model of household gasoline demand gasoline demand studies typically generate a single price and income elasticity for a country it is however possible that these elasticities may differ among various socio economic groups at the same time parametric gasoline demand models may not be flexible enough to capture the changes in price elasticities with different levels of income this paper models us gasoline demand using more flexible semiparametric techniques accommodating the possibility of differences in responses among households the econometric model employs a non parametric bivariate smoothing for price and income and a parametric representation of other explanatory variables possible heterogeneity in price and income elasticities is modelled through interacting price and income with demographic variables results show that price responses do vary with demographic variables such as income multiple vehicle holding presence of multiple wage earners or rural or urban residential locations households responses to a price change decrease with higher income multiple vehicle and multiple earner households also show higher sensitivity to a price change households located in urban areas reduce consumption more than those in rural areas in response to an increase in price comparison of the flexible semiparametric model with a parametric translog model however reveals no significant differences between results and the parametric models have the advantage of lower computational requirements and better interpretability

an integrated economic and distributional analysis of energy policies most public policies particularly those in the energy sphere have not only efficiency but also distributional effects however there is a trade off between modelling approaches suitable for calculating those impacts on the economy for the former most of the studies have been conducted with general equilibrium models whereas partial equilibrium models represent the main approach for distributional analysis this paper proposes a methodology to simultaneously carry out an analysis of the distributional and efficiency consequences of changes in energy taxation in order to do so we have integrated a microeconomic household demand model and a computable general equilibrium model for the spanish economy we illustrate the advantages of this approach by simulating a revenue neutral reform in spanish indirect taxation with a large increase of energy taxes that serve an environmental purpose the results show that the reforms bring about significant efficiency and distributional effects in some cases counterintuitive and demonstrate the academic and social utility of this approximation

testing a theory of exact aggregation this article analyzes the importance of exact aggregation restrictions and the modeling of demographic effects in jorgenson lau and stoker s 1982 model of aggregate consumer behavior these issues are examined at the household level using canadian cross sectional microdata exact aggregation restrictions and some implicit restrictions on household demographic effects are strongly rejected by our data these results do not preclude pooling aggregate time series data with cross sectional microdata to estimate a model of aggregate consumer behavior they do suggest however an alternative basis for the aggregate model

testing the rank of engel curves with endogenous expenditure abstract we find that the endogeneity of consumer expenditure tends to increase the estimated rank of engel curves this result based on nonparametric procedure is in line with previous results obtained in the context of parametric specifications

price unit value and quality demanded abstract given the paucity of quality price data it is common to rely on unit value average expenditure per unit as a proxy for price but this is an imperfect proxy if households respond to price increases by substituting to lower quality goods this paper draws on survey data that contain both unit value and price to estimate the severity of quality substitution in indonesia finding that it is prevalent the paper next calculates price elasticities that correct for quality substitution evaluating and ultimately rejecting a commonly used method for calculating price elasticities using only unit value data finally it demonstrates that quality substitution can result in biased price elasticities even when price is perfectly observed

what can we learn about news shocks from the late 1990s and early 2000s boom bust period this is a substantially revised version of the paper previously circulated as a new var based approach to identifying news shocks

the intertemporal elasticity of substitution an exploration using a us panel of state data this paper uses state level consumption data to estimate the intertemporal elasticity of substitution of consumption ies in contrast to the results of hall 1988 and campbell and mankiw 1989 we provide evidence indicating that the ies is significantly different from zero and probably close to one since inference about the ies in the context of the standard euler equation is problematic as a result of mis specification bias we cast most of our discussion in the context of the framework developed by campbell and mankiw this modifies the euler equation in that a fraction of agents simply consume their income the use of panel data to examine the relationship between interest rates and consumption growth has two advantages first we achieve a significant increase in precision which in particular allows us to rule out a zero ies second we can use the panel aspect of the data to bypass asset return measurement problems in particular we identify a common time component in expected consumption growth that is associated with movements in interest rates when the ies is positive

nonparametric estimation of exact consumers surplus and deadweight loss we apply nonparametric regression models to estimation of demand curves of the type most often used in applied research from the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss which are the most widely used welfare and economic efficiency measures in areas of economics such as public finance we also develop tests of the symmetry and downward sloping properties of compensated demand we work out asymptotic normal sampling theory for kernel and series nonparametric estimators as well as for the parametric case the paper includes an application to gasoline demand empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline in this application we compare parametric and nonparametric estimates of the demand curve calculate exact and approximate measures of consumers surplus and deadweight loss and give standard error estimates we also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation

energy and depletable resources economics and policy 1973 1998 abstract this paper reviews the impact of the literature in depletable resources and energy economics over the period 1973 1998 particularly the initial period of publication of the journal of environmental economics and management 1974 1998 a discussion of prominent policy issues in this arena is provided along with an indication of what academic economics papers have contributed to that debate this is followed by a citation analysis of contributions in the fields of energy and exhaustible resource economics for each of these two fields a list of the top papers in each five year period from 1974 to 1998 is presented along with a list of the top journals in each decade based on average citations per article the top ten cited articles in the fields in the journal of environmental economics and management are also presented

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase