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Changes in Gasoline Prices and Consumer Sentiment

Journal of Applied Business and Economics, Forthcoming

10 Pages Posted: 4 Apr 2012 Last revised: 12 Jun 2013

Mark A. Johnson

Loyola University Maryland

Douglas J. Lamdin

University of Maryland, Baltimore County (UMBC) - Department of Economics

Date Written: January 1, 2012

Abstract

Volatile gasoline prices are frequently mentioned in the press. Using more than thirty years of consumer sentiment data, we analyze the relationship between changes in gasoline prices and its impact on consumer sentiment. We find a negative relationship between changes in gasoline prices and its impact on consumer sentiment, suggesting that as gasoline prices rise (fall), this negatively (positively) impacts consumer sentiment. Additionally, causality analysis provides support that changes in gasoline prices leads consumer sentiment and changes in consumer sentiment. Our results are consistent with the documented fact that the demand for gasoline by consumers is inelastic in the short-run.

Keywords: consumer sentiment, gasoline prices, causality tests

JEL Classification: Q41, C2

Suggested Citation

Johnson, Mark A. and Lamdin, Douglas J., Changes in Gasoline Prices and Consumer Sentiment (January 1, 2012). Journal of Applied Business and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2034408

Mark A. Johnson

Loyola University Maryland ( email )

4501 North Charles Street
Baltimore, MD 21210-2699
United States

Douglas J. Lamdin (Contact Author)

University of Maryland, Baltimore County (UMBC) - Department of Economics ( email )

1000 Hilltop Circle
Baltimore, MD 21250
United States
410-455-2672 (Phone)
410-455-1054 (Fax)

HOME PAGE: http://www.umbc.edu/economics/faculty_cv/lamdin.html

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