Elasticities of Gasoline Demand in Switzerland
University of Applied Sciences Western Switzerland - Geneva School of Business Administration
University of Neuchatel - Institute for Research in Economics (IRENE)
January 13, 2012
Using co-integration 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. The 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 vehicles stocks, fuel prices in neighbouring countries, oil shocks and fuel taxes. All of these additional variables are found to be significant determinants of demand.
Number of Pages in PDF File: 15
Keywords: gasoline demand, price elasticity, income elasticity, cointegration, error correction model
JEL Classification: C32, Q41, R41working papers series
Date posted: January 13, 2012 ; Last revised: October 25, 2012
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