Gasoline Price Asymmetries in the Euro Zone
8 Pages Posted: 27 Mar 2012
Date Written: August 1, 2011
This paper uses the generalized method of moments (GMM) estimation to a panel data error correction model (ECM) in order to measure the asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail gasoline price respectively. For this purpose, we use an updated data set of weekly observations covering the period from January 2000 to February 2011 for eleven euro zone countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal and Spain). The results favor the common perception that retail and wholesale gasoline prices respond asymmetrically to cost increases and decreases.
Keywords: Generalized method of moments, panel data, asymmetries, euro zone, error correction models
JEL Classification: L11, C51, C33
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