importers. For example, the gallon of regular gasoline was less than a dollar in Argentina, Bolivia, Colombia, and Mexico, while it averaged 1.15 US$/gallon in net oil importers. Table 10 provides the simple correlation between changes in oil prices and changes in the prices of the three derivatives. Inspection of this table indicates that oil price changes are positively and significantly correlated with premium and regular gasoline in net oil importer countries even though the correlation is very modest: .22 for premium and .14 for regular. On the contrary, oil prices do not appear to be correlated with diesel at the pump regardless of net importer/net exporter status or with gasoline in net exporters.

More formally, we explore the degree of pass through with the following panel fixed-effects model:<sup>9</sup> Δ ln( _PG_ ) _it_ =ν _i_ + α 2 Δ ln( _PG_ ) _i_ , _t_ − 1 + α 3 Δ ln( _PO_ ) _i_ , _t_ + βΔ ln( _PO_ ) _i_ , _t_ − 1 + ε _i_ , _t_ (5) where PG is our variable of interest (either end-user price of premium, regular, or diesel fuels) in dollars, and _PO_ is the price of oil. ν _i_ is a country-specific effect, and ε _it_ is an i.i.d. error term Tables 11 and 12 report average results based on pooling the previous data for exporters (table 11) and importers (table 12) countries. In both cases, the estimated model allows for fix-effects. These tables continue to indicate that in net exporters there is no pass-through whereas in importers there is a limited pass through: on average a 1 percent increase in crude oil would translate into an average domestic gas increase of between .5 and .65 depending of the type of fuel considered and model used to estimate the pass through.

Finally, we estimate equation (5) using ordinary least squared methods with robust standard errors for each individual country. Table 14 reports the econometric results. To facilitate the interpretation of the results, in Table 13 we classify countries into four groups: (i) no pass-through, if neither the change in current oil price nor the change in the price the month before is significant (or significant but negatively related); (ii) low pass-through if the coefficients α _2_ and/or β are positive and significant, with a value below 0.33; (iii) medium pass-though if the coefficients α _2_ and/or β are positive and significant, with values between 0.33 and 0.66; and (iv) high pass-though if the coefficients α _2_ and/or β are positive and significant, with values above 0.66.

Reinforcing the findings from the panel analysis, the four net oil exporters in our sample are classified in the “no pass-through category” for all types of fuels. In addition, Peru does not show signs of pass-though for regular gasoline (the only type available in our sample). Paraguay also appears with no pass-though in the case of regular gasoline, but it shows signs of low pass-through for premium gasoline and diesel (15 percent and 23.7 percent, respectively). Costa Rica is the only Central American country with no pass-through in two types of derivatives (premium and diesel), while it translates oil price changes to regular gasoline (44 percent). The rest of Central American countries and

> 9 This model is similar to the one used by World Bank (2006).

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