foreign exchange shocks and gasoline consumption abstract in an open economy the foreign exchange rate fer influences incentives for the cross border shopping of gasoline as well as the opportunity cost of using vehicles and the relative attractiveness of home versus foreign travel using monthly regional level data of gasoline consumption in iran we estimate the impact of exchange rate shocks both in level and volatility on gasoline demand we find that positive exchange rate shocks have a negative impact on total gasoline consumption as well as on vehicle users demand in both short run and long run furthermore we find that in the periods that fer is less volatile the responsiveness of gasoline demand to a change in fer is more pronounced

efficient methods of measuring welfare change and compensated income in terms of ordinary demand functions a utility maximizing consumer with a completely known system of ordinary demand functions q h p c is considered let p qo and p q be two arbitrary equilibrium situations the problem is to evaluate in which of the situations the utility is higher without knowing the utility function revealed preference theory tells that the ordinary demand functions which are in principle observable contain enough information to solve the problem remaining difficulties are therefore mainly computational we present how the compensated income c i c p qo and the compensated demand h p cl1 are calculated with arbitrary accuracy using only the ordinary demand system our two efficient algorithms also have interesting interpretations in terms of index numbers and consumer surplus measures

nonparametric estimation of sample selection models sample selection models provide an important way of accounting for economic decisions that combine discrete and continuous choices and of correcting for nonrandom sampling nonparametric estimators for these models are developed in this paper these can be used for estimating shapes and important economic quantities as in standard nonparametnc regression endogeneity of regressors of interest is allowed for series estimators for these models are developed which are useful for imposing additivity restnctions that arise from selection corrections convergence rates and asymptotic normality results are derived an application to returns to schooling among australian young females is given

response of energy demand to higher prices what have we learned twelve conclusions graduating from the general statement that rising energy prices have led to conservation and interfuel substitution to more specific statements about short run gasoline price elasticities support the effectiveness of both the natural experiment and the government and utility efforts there is still a need for quantitative data however 7 references

a simple and efficient method for estimating the magnitude and precision of welfare changes in this article we propose a simple and efficient method of estimating welfare measures in an n equation system we also estimate the variance of these measures the accuracy and convergence properties of our approach are studied the algorithm converges quadratically this is a distinct improvement over the vartia algorithm which converges linearly we demonstrate the method by evaluating the welfare consequences of price changes in the provision of health care the gauss code which is very short is included

government ownership of banks institutions and economic growth we present new cross country evidence that reveals that during 1995 2007 government ownership of banks has been robustly associated with higher long run growth rates we also show that previous results suggesting that government ownership of banks is associated with lower long run growth rates are not robust to conditioning on more fundamental determinants of economic growth

limit pricing and the in effectiveness of the carbon tax we present a theory of limit pricing monopoly in non renewable resource production facing a very inelastic demand an oil monopoly seeks to induce the highest price that does not destroy its demand unlike the conventional hotellian analysis the monopoly tolerates some ordinary substitutes to its oil but deters high potential ones with limit pricing policy induced extraction changes do not obey the usual logic for example oil taxes have no effect on current oil production extraction increases when high potential substitutes are promoted but can be effectively reduced by supporting ordinary substitutes the carbon tax not only applies to oil it also penalizes its ordinary carbon substitutes whose market shares are taken over by the monopoly thus the carbon tax ambiguously affects current and long term oil production and carbon emissions

social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

anticipation tax avoidance and the price elasticity of gasoline demand summary least squares estimates of the response of gasoline consumption to a change in the gasoline price are biased toward zero given the endogeneity of gasoline prices a seemingly natural solution to this problem is to instrument for gasoline prices using gasoline taxes but this approach tends to yield implausibly large price elasticities we demonstrate that anticipatory behavior provides an important explanation for this result gasoline buyers increase purchases before tax increases and delay purchases before tax decreases rendering the tax instrument endogenous including suitable leads and lags in the regression restores the validity of the iv estimator resulting in much lower elasticity estimates copyright 2016 john wiley sons ltd

labor supply deadweight loss and tax reform act of 1986 a nonparametric evaluation using panel data abstract tax reform act of 1986 tra 1986 has provided an invaluable source of variation in tax rates to study the effects of tax reforms on labor supply in the us most existing studies exploiting variation generated by tra 1986 have used cross sectional variation in tax rates or assumed a linear labor supply function or have not couched their analysis in a nonlinear budget set framework this paper uses the drastic variation in the budget set induced by tra 1986 as a source of identification and combines two novel approaches to estimate behavioral effects of tax reforms i first use nonparametric estimation methods with nonlinear budget sets blomquist soren newey w 2002 nonparametric estimation with nonlinear budget sets econometrica 70 6 2455 2480 to estimate a labor supply function using waves of psid just before and after tra 1986 nonparametric method developed in hausman and newey hausman j whitney newey 1995 nonparametric measurement of exact consumer s surplus and deadweight loss econometrica 63 1145 76 is then applied to estimate the deadweight loss from tra 1986 the nonparametric estimate of the compensated wage elasticity is 0 22 i find that tra 1986 had a small but positive effect on labor supply of men of about 2 at the sample mean tra 1986 was associated with robust reduction in deadweight loss from the pre tra 1986 level and this reduction is positively correlated with income and wages

factor demand and substitution in a developing country energy use in mexican manufacturing a translog cost function is used to estimate elasticities of substitution and factor demand in a number of mexican industries 1966 81 the results vary but factor demand is on average quite price sensitive and elasticities are of the same order of magnitude as in other studies for both developed and developing countries this indicates that factor demand does adapt to price changes even in countries which are dependent on buying technology abroad it also shows that a policy of heavy subsidies to domestic energy consumption is the main reason for growing energy intensity thereby casting some light on the allocation costs of such subsidies

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

reply to a comment on three reasons to use annual payments in contingent valuation abstract whitehead 2017 suggests the contingent valuation cv data from 3 egan et al 2015b lacks theoretical validity and has a fat tails problem while also questioning our conclusion that cv surveys using annual payments produce willingness to pay wtp estimates that better match consumer surplus estimates from a travel cost model in this reply we use likelihood ratio tests to show that our cv data is theoretically valid we use the turnbull and kristrom distribution free estimators to show that our cv data generate economically significant wtp estimates with small standard errors finally we apply the sensitivity analyses from our original paper to whitehead s results these sensitivity analyses overwhelmingly support our original conclusion in favor of using annual payments in cv surveys

the renewable fuel standard in competitive equilibrium market and welfare effects we construct a tractable multi market equilibrium model designed to evaluate alternative biofuel policies the model integrates the u s agricultural sector with the energy sector and it explicitly considers both u s ethanol and biodiesel production the model provides a structural representation of the renewable fuel standard rfs policies and it uses the arbitrage conditions defining the core value of renewable identification number prices to identify the relevant competitive equilibrium conditions the model is parameterized based on elasticities and technical coefficients from the literature to represent observed 2015 data the model is simulated to analyze alternative scenarios including repeal of the rfs projected 2022 rfs mandates and optimal second best mandates the results confirm that the current rfs program considerably benefits the agriculture sector but also leads to overall welfare gains for the united states mostly via beneficial terms of trade effects implementation of projected 2022 mandates which would require further expansion of biodiesel production would lead to a considerable welfare loss relative to 2015 mandate levels constrained second best optimal mandates would entail more corn based ethanol and less biodiesel than currently mandated

nonparametric estimation of the impact of taxes on female labor supply this paper proposes a simple extension of nonparametric estimation methods for nonlinear budget set models derived in blomquist and newey 2002 to censored dependent variables the nonparametric method is applied to estimate female labor supply elasticities using data on married women from the 1985 and 1989 waves of the panel study of income dynamics exploiting the substantial variation in budget sets caused by the tax reform act of 1986 as a source of identification the estimated wage elasticities from this new method are 0 56 overall and 0 27 on the intensive margin the income elasticity estimates are close to 0 67 overall and 0 13 on the intensive margin compared with the linear labor supply model the estimated elasticities are usually larger for the nonparametric specifications that account for nonlinear budget sets copyright 2010 john wiley sons ltd

demand specification for municipal water management evaluation of the stone geary form to specify demand in most water allocation problems researchers face a tradeoff between flexibility and parsimony flexible forms are less constraining on elasticity estimates but require large parameter sets that tend to cause poor out of sample forecasts and computational difficulties using a five year panel of texas municipalities the parsimonious stone geary form yields estimated demand functions that are comparable to flexible form results the stone geary specification also provides an estimate of the portion of water use that may not be responsive to price and is useful in analysing price structures and designing conservation policies

environmental preferences and consumer behavior abstract this paper demonstrates that environment conscious consumers have lower gasoline retail tax exclusive price and excise tax elasticities suggesting that they are less sensitive to changes in prices and taxes than their less environmental counterparts these results on an american state year dataset are robust to the use of two environmental proxies and to the instrumentation of gasoline retail prices these findings support the existence of heterogeneous environmental preferences by demonstrating that certain consumers incorporate environmental ideology into their utility functions distinctly from income considerations the implication that environmental preferences contribute to differential responsiveness to pecuniary signals has repercussions for the forecasting of consumer behavior and for the ease of implementation of environmental policy

three sides of harberger triangles prevailing economic wisdom is highly critical of injudicious tax policies or government regulations uncorrected externalities unchecked monopolistic practices and various other market failures when economists are challenged to quantify the economic costs of associated price distortions it is standard practice and has been since the 1960s to use a small number of assumptions and selected elasticities to estimate areas of the relevant harberger triangles this simple and straightforward exercise has numerous applications and the virtue of producing answers rather than conjectures harberger triangles come in many shapes and sizes figure 1 offers an illustration of such a triangle for the simple case of an excise tax point a of figure 1 at which the demand and supply schedules intersect denotes market equilibrium in the absence of the tax with quantity q1 transacted at price p1 introduction of an excise tax at rate t payable by firms selling the commodity shifts the supply schedule upward by t at the new market equilibrium firms sell q2 units of the commodity at a market price of p2 receiving after tax p3 a p2 0 t market equilibrium at point a in figure 1 has the feature that marginal consumption benefits equal marginal production costs the excise tax drives a wedge between marginal benefits and marginal costs at consumption level q2 consumers are willing to pay any amount up to p2 for additional units of the good and suppliers would readily provide additional units of the good for any price of p3 or greater but these additional transactions do not take place due to the effect of the tax wedge the loss associated

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

gasoline prices fuel economy and the energy paradox abstract policymakers often assert that consumers undervalue future gasoline costs when they buy automobiles we test this by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to variation in gasoline prices vehicle prices move as if consumers are indifferent between 1 00 in discounted future gas cost and 0 76 in vehicle purchase price we show how corrections for endogenous market shares and utilization measurement error and different gasoline price forecasts affect the results we also provide unique evidence of sticky information vehicle markets respond to changes in gasoline prices with up to a six month delay

an estimation of u s gasoline demand a smooth time varying cointegration approach abstract in this paper the u s gasoline demand from 1976 to 2008 is estimated using a time varying cointegrating regression we find that price elasticity increased rapidly during the late 1970s and then decreased until 1987 after a relatively small scaled increase decrease cycle from 1987 to 2000 the price elasticity rose again after 2000 the time varying change of the elasticities may be explained by the proportion of gasoline consumption to income and fluctuation of the degree of necessity the result of the error correction model shows that a deviation from a long run equilibrium is corrected quickly and the welfare analysis illustrates there may be a gain by shifting the tax scheme from income tax to gasoline tax

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

the effect of oil supply shocks on us economic activity what have we learned estimated responses of real oil prices and us gross domestic product gdp to oil supply disruptions vary widely we show that most variation is attributable to differences in identification assumptions and in the model specification models that allow for a large short run price elasticity of oil supply imply a larger response of oil prices and a larger longer lived contraction in us real gdp we find that if we condition on a range of supply elasticity values supported by microeconomic estimates the differences in the oil price responses diminishes we also examine the role of lag length of using pre 1973 data alternative measures of real economic activity and using the median response function instead of the modal structural model

three reasons to use annual payments in contingent valuation surveys convergent validity discount rates and mental accounting abstract we present three arguments for using ongoing annual payments in contingent valuation cv surveys that estimate the benefit of a long lasting environmental improvement first by matching the duration of the payments with the duration of the environmental benefits survey respondents are spared from performing complicated present value calculations second willingness to pay wtp estimates from cv surveys that include ongoing annual payments best match wtp estimates obtained using travel cost surveys third respondents are less likely to face binding mental budget constraints with ongoing annual payments than with a larger one time payment in addition respondents discount rates may be estimated by collecting non hypothetical individual time preference data as part of the valuation survey

demand systems with and without errors revealed preference theory assumes that each consumer has demands that are rational meaning that they arise from the maximization of his or her own utility function in contrast econometric or statistical demand models assume that each consumer s demands equal a rational systematic component derived from a common utility function plus an individual specific additive error term this paper reconciles these differences by providing necessary and sufficient conditions for rationality of statistical demand models given individual consumer rationality

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

analysing households responsiveness towards socio economic determinants of residential electricity consumption in singapore abstract the research of household electricity use is still relatively new for singapore where apart from some government surveys and sparingly available papers not much has been done to understand the underlying socio economic determinants that affect residents energy demand here we seek to quantify price and income elasticities as well as provide reasonable justification for price asymmetry in singapore using a panel approach across dwelling types and geographical areas we find that households do not react much to prices and that price elasticities may decrease as income rises there is also some evidence of price asymmetry with surprising results putting responsiveness towards price decreases larger than price increases this points towards similar behavioural patterns with the rebound effect for household energy efficiency if found present in future studies our findings suggest that there will only be positive responses towards dynamic pricing and higher churn rates if more transparent information is provided on related cost savings when households are exposed to retail choice in the electricity market after full retail competition is introduced in 2018 in addition a large role will have to come from cultivating the young to engage in sustainable practices to achieve energy efficiency targets

a simulation based welfare loss calculation for labor taxes with piecewise linear budgets graduated income tax rates and transfer programs create piecewise linear budget constraints that consist of budget segments and kink points with any change in these tax rules each individual may switch between a kink point and a budget segment between two budget segments or between two kink points with errors in the estimated labor supply equation the new choice is uncertain and so the welfare effects of a tax change are uncertain we propose a simulation based method to compute expected welfare effects that is easy to implement and that fully accounts for uncertainties about choices around kink points our method also provides information about expected changes in working hours d 2003 elsevier b v all rights reserved

estimating retail gasoline price dynamics the effects of sample characteristics and research design the study shows that much of the variation in the findings of the literature on retail gasoline price dynamics is systematic rather than sample variation from using different data estimates of pass through rates depend systematically on research design and features of the data such as the sampling frequency the choice of upstream price whether taxes are included or not the sample length and the postulated lag structure in addition there are systematic differences between time periods and countries using a 20 year long dataset of 28 european union countries we quantify the extent of estimate variation that arises from the choice of data structure from that arising from temporal and country heterogeneity and sampling variation we also show that country heterogeneity itself has systematic components with wealthier countries experiencing slower adjustments our results inform the interpretation of results on pass through rates derived from error correction models they are also of relevance for the broader literature estimating the transmission of price shocks in the economy

greening the vehicle fleet norway s co2 differentiated registration tax abstract in 2007 norway established its vehicle registration tax linked to vehicle co2 intensities in 2009 the tax was modified to a feebate structure but maintained its link to co2 intensities using a panel dataset to exploit the quasi experimental tax reforms we estimate that a 1000 nok 125 usd tax increment reduces new vehicle sales by 1 06 1 58 this result yields an elasticity of average co2 intensity to co2 price implied by the tax of 0 06 with a pass through of the tax to car prices of 88 the resulting elasticity of average co2 intensity to average car price is 0 53 thus the tax significantly shifts consumers toward lower emission vehicles our counterfactual simulations suggest that high emission vehicle segments lose market shares and become less co2 intensive while low emission vehicle segments gain market shares

fat tails and truncated bids in contingent valuation an application to an endangered shorebird species a yes response function in a contingent valuation study is said to have fat tails if it has a high and slowly declining yes response rate at high bid levels truncated bids refer to the practice of dropping high bid offers before a yes response rate of near zero is reached this is a common practice in contingent valuation we explore the extent and implications of fat tails and truncated bids in a study of an endangered shorebird species we find among other things that mean willingness to pay is quite sensitive to the highest bid offered so much so that the choice of highest bid nearly dictates outcomes

progress and challenges in utilization of palm oil biomass as fuel for decentralized electricity generation it has been broadly accepted worldwide that global warming indeed is the greatest threat of the time to the environment renewable energy re is expected as a perfect solution to reduce global warming and to endorse sustainable development progressive release of greenhouse gases ghg from increasing energy intensive industries has eventually caused human civilization to suffer realizing the exigency of reducing emissions and simultaneously catering to needs of industries researchers foresee the re as the perfect entrant to overcome these challenges re provides an effective option for the provision of energy services from the technical point of view while biomass a major source of energy in the world until before industrialization when fossil fuels become dominant appears an important renewable source of energy and researches have proven from time to time its viability for large scale production being a widely spread source biomass offers the execution of decentralized electricity generation gaining importance in liberalized electricity markets the decentralized power is characterized by generation of electricity nearer to the demand centers meeting the local energy needs researchers envisaged an increasing decentralization of power supply expected to make a particular contribution to climate protection this article investigates the progress and challenges for decentralized electricity generation by palm oil biomass according to the overall concept of sustainable development

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

a comment on three reasons to use annual payments in contingent valuation egan corrigan and dwyer 2015 conduct a survey of ohio residents and collect contingent valuation method data for a wetlands restoration project the cvm scenario includes a split sample treatment where payment schedules differ my analysis of these data suggests that there is little evidence of theoretical validity in the data and fat tails is a significant problem

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

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

explanations for the 2014 oil price decline supply or demand abstract the brent price of crude oil declined from 112 in june 2014 to a low of 31 in january 2016 both nominal prices a cumulative decrease of more than 70 some attribute the decline to increased oil production due to the u s shale revolution this paper proposes a variety of diagnostics to assess the how consistent this explanation is with the data i find that the data are broadly inconsistent with this attribution of the decline to shale oil rather the data are more consistent with a demand side explanation of weakening global economic conditions and demand for commodities including but not limited to oil in summary there is no evidence that the u s shale revolution played a significant role in the decline in oil prices since 2014 rather the evidence suggests that weakening oil demand played a much stronger role in driving the 2014 decline in oil prices

nonparametric regression techniques in economics this introduction to nonparametric regression emphasizes techniques that might be most accessible and useful to the applied economist the paper begins with a brief overview of the class of models under study and central theoretical issues such as the curse of dimensionality the bias variance trade off and rates of convergence the paper then focuses on kernel and nonparametric least squares estimation of the nonparametric regression model and optimal differencing estimation of the partial linear model constrained estimation and hypothesis testing is also discussed empirical examples include returns to scale in electricity distribution and hedonic pricing of housing attributes

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

a tale of two tails commuting and the fuel price response in driving abstract pricing greenhouse gases is widely understood as the most efficient approach for mitigating climate change yet distributional effects hamper political acceptance these distributional effects are especially important in transport the fastest growing sector for greenhouse gas emissions using rich data covering the entire population of vehicles and households in denmark this study uncovers an important feature of driving demand two groups of much more responsive households in the lower and upper tails of the work distance distribution we further estimate the causal effect of public transport a critical determinant of the upper tail and show how public transport access can both reconcile differences in fuel price elasticities between the united states and europe and considerably influence the distributional effects of fuel pricing

sources of bias and solutions to bias in the consumer price index four sources of bias in the consumer prices index cpi have been identified the most discussed is substitution bias which creates a second order bias in the cpi three other changes besides prices changes create first order effects on a correctly measured cost of living index coli i explain in this paper that a pure price based approach of surveying prices to estimate a coli cannot succeed in solving the 3 problems of first order bias i discuss economic and econometric approaches to measuring the first order bias effects as well as the availability of scanner data that would permit implementation of the techniques

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

how do oil producers respond to oil demand shocks abstract this paper analyzes the response of international oil producers to demand induced changes in the price of crude oil during 1975 2011 focusing on potential differences between opec and non opec countries the goal is to derive consistent estimates of the short run price elasticity of crude oil supply at the country level i find that oil producers hardly respond to demand shocks within the same month and that the corresponding impact price elasticities of supply are statistically indistinguishable from zero while there is little evidence of differences in the dynamic responses to a typical flow demand shock on average over the sample period opec members seem to curtail production in response to a speculative demand shock whereas non opec production expands significantly flow and speculative demand shocks account for a nontrivial fraction of the total variability in country level crude oil supply

how much can co2 emissions be reduced if fossil fuel subsidies are removed abstract this paper analyzes consumers price elasticities of demand for fossil fuels and how a reduction of fossil fuel subsidies can lead to important reduction in co 2 emissions for various groups of countries that have relatively high fossil fuel subsidies and notably on diesel including countries in the middle east and north africa mena these countries continue to maintain significant levels of fuel subsidies with iran and saudi arabia being the largest contributors to co 2 emissions this paper illustrates that fuel price policy reforms by these countries would be an important instrument for both climate and economic policies we estimate that a reduction in subsidies to both gasoline and diesel by about 20 us cents per liter will lead to significant decreases in co 2 emissions both in the mena region and globally in iran for example the reductions could be up to 90 and 50 of current emissions generated from diesel and gasoline consumption respectively and for saudi arabia approximately 70 and 40 respectively

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

how sensitive are consumer expenditures to retail energy prices abstract there is growing evidence that the primary effect of energy price shocks on the u s economy involves a reduction in consumer spending we quantify the direct effect on real consumption of unanticipated changes in discretionary income shifts in precautionary savings and changes in the operating cost of energy using durables the possibility of asymmetries in the response of real consumption to energy price shocks is also considered we demonstrate that linear models are consistent with the symmetric behavior of real consumption in 1979 when energy prices increased sharply and in 1986 when they fell sharply it is shown that historically energy price shocks have been an important factor in explaining u s real consumption growth but by no means the dominant factor

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

gasoline price and new vehicle fuel efficiency evidence from canada abstract using data on all new vehicles registered in canada from 2000 to 2010 we estimate the elasticity of the fuel economy of the new vehicle stock with respect to gasoline price we find that a 10 increase in gasoline price causes a 0 8 improvement in the fuel economy of new vehicles however we also show that consumers respond much more strongly to fuel taxes than to other components of the gasoline price finally we provide evidence that consumers in dense urban areas are more responsive to changes in fuel prices than consumers living on the urban periphery

a meta analysis of the price elasticity of gasoline demand a sur approach abstract automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency mileage per car and car ownership this implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency mileage per car and car ownership in this meta analytical study we aim to investigate and explain the variation in empirical estimates of the price elasticity of gasoline demand a methodological novelty is that we use the linear relationship between the elasticities to develop a meta analytical estimation approach based on a seemingly unrelated regression sur model with cross equation restrictions this approach enables us to combine observations of different elasticities and thus increase our sample size furthermore it allows for a more detailed interpretation of our meta regression results the empirical results of the study demonstrate that the sur approach leads to more precise results i e lower standard errors than a standard meta analytical approach we find that with mean short run and long run price elasticities of 0 34 and 0 84 respectively the demand for gasoline is not very price sensitive both in the short and the long run the impact of a change in the gasoline price on demand is mainly driven by responses in fuel efficiency and mileage per car and to a slightly lesser degree by changes in car ownership furthermore we find that study characteristics relating to the geographic area studied the year of the study the type of data used the time horizon and the functional specification of the demand equation have a significant impact on the estimated value of the price elasticity of gasoline demand

measuring oil supply disruptions a historical perspective abstract an oil supply disruption in opec member countries or in the persian gulf region may have unusually large effects on crude oil prices because such a disruption may escalate into wider disruptions within these volatile regions this analysis reviews and updates several past studies to identify specific events that can be linked to oil supply shocks that remove oil production while increasing world oil prices using historical data it finds that a 10 cut in world oil supplies arising from abrupt and large monthly disruptions of opec and persian gulf crude oil production correlates with a 35 43 increase in inflation adjusted crude oil prices the data also reveal that almost all sudden and large oil supply disruptions occurred prior to 2004 which raises some interesting issues about how to interpret the evidence from studies evaluating the impact of future oil disruptions on either prices or the economy

fuel consumption and gasoline prices the role of assortative matching between households and automobiles abstract analyses of policies to reduce gasoline consumption have focused on two effects a compositional effect on the fuel economy of the automotive fleet and a utilization effect on how much people drive however the literature has missed a third effect a matching effect in which policies change how high utilization households are matched to fuel efficient vehicles in equilibrium we show that higher gas prices should lead to stronger assortative matching empirical estimates using us micro level data are consistent with this hypothesis we find a 0 50 increase in the gas tax would reduce us gas consumption by 0 8 through the matching effect alone bringing annual environmental benefits of about 1 7 billion

biofuels policies and fuel demand elasticities in brazil abstract biofuels are often seen by policymakers as solutions to concerns about the environment energy diversification and rural development to understand the impacts of biofuel policy however it is important to understand demand elasticities brazil a leader in biofuels provides a unique setting to increase our knowledge about biofuel policy and the interactions within and between the gasoline and ethanol markets we estimate own price cross price and income elasticities of the demand for ethanol and gasoline using a novel instrumental variable approach to control for the inherent endogeneity between supply and demand this results in own price elasticities for both fuels higher than previous literature suggests approximately 0 9 for gasoline and 1 5 for ethanol income elasticities for both fuels are approximately 0 8 we also examine the elasticity impacts following the introduction of flex fuel cars into the brazilian market by estimating the model with over 100 subsamples across time we find that cross price elasticities become positive significant and increasing but only after larger market penetration of flex fuel cars which occurred approximately three years after their introduction

sustainable energy systems role of optimization modeling techniques in power generation and supply a review electricity is conceivably the most multipurpose energy carrier in modern global economy and therefore primarily linked to human and economic development energy sector reform is critical to sustainable energy development and includes reviewing and reforming subsidies establishing credible regulatory frameworks developing policy environments through regulatory interventions and creating market based approaches energy security has recently become an important policy driver and privatization of the electricity sector has secured energy supply and provided cheaper energy services in some countries in the short term but has led to contrary effects elsewhere due to increasing competition resulting in deferred investments in plant and infrastructure due to longer term uncertainties on the other hand global dependence on fossil fuels has led to the release of over 1100 gtco2 into the atmosphere since the mid 19th century currently energy related ghg emissions mainly from fossil fuel combustion for heat supply electricity generation and transport account for around 70 of total emissions including carbon dioxide methane and some traces of nitrous oxide this multitude of aspects play a role in societal debate in comparing electricity generating and supply options such as cost ghg emissions radiological and toxicological exposure occupational health and safety employment domestic energy security and social impressions energy systems engineering provides a methodological scientific framework to arrive at realistic integrated solutions to complex energy problems by adopting a holistic systems based approach especially at decision making and planning stage modeling and optimization found widespread applications in the study of physical and chemical systems production planning and scheduling systems location and transportation problems resource allocation in financial systems and engineering design this article reviews the literature on power and supply sector developments and analyzes the role of modeling and optimization in this sector as well as the future prospective of optimization modeling as a tool for sustainable energy systems

allocation of canadian natural gas to domestic and export markets canadian natural gas is allocated to domestic and export markets using a non linear optimization model efficient near term prices are low to stimulate consumption and reduce reserves of shut in natural gas many near optimal depletion paths also exist implying greater importance of non efficiency criteria for selecting a socially optimal depletion path finally for canadian consumption decisions through the early 1990s the value of perfect information about future export prospects is likely small mistakes in allocating gas to domestic markets to that time are unlikely to cause serious losses in any of several performance measures including producer surplus economic rent l allocation du gaz naturel canadien entre le marche domestique et les marches d exportation on alloue le gaz naturel canadien entre les marches domestique et 6trangers a l aide d une modele d optimisation non lineaire les prix efficients a court terme sont bas a la fois pour stimuler la consommation et pour reduire les reserves de gaz naturel des puits fermes on peut identifier plusieurs sentiers d epuisement quasi optimaux qui donnent une importance relativement plus grande aux criteres autres que l efficacite dans la selection d un sentier d epuisement socialement optimal enfin pour ce qui a trait aux decisions de consommation au canada jusque dans les debuts des annees 1990 il appert que la valeur d une information parfaite quant aux possibilites d exportation n est pas susceptible d etre grande de plus des erreurs dans l allocation du gaz aux marches domestiques jusqu a ce moment ia ne sont pas susceptibles de causer des pertes enormes quels que soient les indicateurs de performance y compris le surplus au producteur i e la rente economique

the differential effects of oil demand and supply shocks on the global economy abstract we employ a set of sign restrictions on the impulse responses of a global var model estimated for 38 countries regions over the period 1979q2 2011q2 as well as bounds on impact price elasticities of oil supply and oil demand to discriminate between supply driven and demand driven oil price shocks and to study the time profile of their macroeconomic effects across a wide range of countries and real financial variables we show that the above identification scheme can greatly benefit from the cross sectional dimension of the gvar by providing a large number of additional cross country sign restrictions and hence reducing the set of admissible models the results indicate that the economic consequences of a supply driven oil price shock are very different from those of an oil demand shock driven by global economic activity and vary for oil importing countries compared to energy exporters while oil importers typically face a long lived fall in economic activity in response to a supply driven surge in oil prices the impact is positive for energy exporting countries that possess large proven oil gas reserves however in response to an oil demand disturbance almost all countries in our sample experience long run inflationary pressures an increase in real output a rise in interest rates and a fall in equity prices

a consistent semiparametric estimation of the consumer surplus distribution abstract in this paper we examine the consequences of demand function heterogeneity for the estimation of the consumer surplus in particular we show that given a linear demand function with random coefficients one can consistently estimate the consumer surplus distribution without making parametric assumptions about the coefficient distribution the approach is illustrated using data on gasoline consumption

evaluation of grid connected rural electrification projects in developing countries extension of the power grid to rural and remote locations in a country has to be considered after detailed evaluation of technical economic and social implications the use of conventional economic analytical techniques to evaluate proposed rural distribution systems in an oil importing developing country environment is discussed the parameters involved in the analyses are described in detail case studies are presented using a typical developing country revalidation of evaluations incorporating socio economic analysis is introduced

interpreting pre trends as anticipation impact on estimated treatment effects from tort reform abstract while conducting empirical work researchers sometimes observe changes in outcomes before adoption of a new policy the conventional diagnosis is that treatment is endogenous this observation is also consistent however with anticipation effects that arise naturally out of many theoretical models this paper illustrates that distinguishing endogeneity from anticipation matters greatly when estimating treatment effects it provides a framework for comparing different methods for estimating anticipation effects and proposes a new set of instrumental variables to address the problem that subjects expectations are unobservable finally this paper examines a specific set of tort reforms that was not targeted at physicians but was likely anticipated by them interpreting pre trends as evidence of anticipation increases the estimated effect of these reforms by a factor of two compared to a model that ignores anticipation

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

net energy analysis in a ramsey hotelling growth model this article presents a dynamic growth model with energy as an input in the production function the available stock of energy resources is ordered by a quality parameter based on energy accounting the energy return on energy invested eroi in our knowledge this is the first paper where eroi fits in a neoclassical growth model with individual utility maximization and market equilibrium establishing the economic use of net energy analysis on a firmer theoretical ground all necessary concepts to link neoclassical economics and eroi are discussed before their use in the model and a comparative static analysis of the steady states of a simplified version of the model is presented

anticipation and environmental regulation abstract when agents expect a change in regulation to change the relative price of new durable goods they may shift purchases forward to avoid compliance costs in the context of new vehicle emission standards prior analyses have not considered this adjustment margin we model the effects of anticipation on sales and retirements of durable goods and test our theory s predictions empirically using the 2007 implementation of heavy duty emission standards we find evidence that anticipation caused a sales spike just before the policy took effect and a symmetric sales slump after implementation which resulted in 31 164 more freight truck sales ahead of the new standard and as much as 118 million in environmental damages over the lifetimes of those vehicles