Changes in Fuel Economy: An Analysis of the Spanish Car Market

Documents de Treball de l’IEB 2016/15

49 Pages Posted: 17 Jun 2016  

Anna Matas

Autonomous University of Barcelona

Josep Lluis Raymond

Autonomous University of Barcelona

Andrés Domínguez

Autonomous University of Barcelona - Department of Applied Economics

Date Written: June 02, 2016

Abstract

This paper estimates the role that technological change and car characteristics have played in the rate of fuel consumption of vehicles over time. Using data from the Spanish car market from 1988 to 2013, we estimate a reduced form equation that relates fuel consumption with a set of car characteristics. The results for the sales-weighted sample of vehicles show that energy efficiency would have improved by 32% and 40% for petrol and diesel cars respectively had car characteristics been held constant at 1988 values. However, the shift to bigger and more fuel-consuming cars reduced the gains from technological progress. Additionally, using the results of the fuel equation we show that, besides a natural growth rate of 1.1%, technological progress is affected by both the international price of oil and the adoption of mandatory emission standards. Moreover, according to our estimations, a 1% growth in GDP would modify car characteristics in such a way that fuel consumption would increase by around 0.23% for petrol cars and 0.35% for diesel cars.

Keywords: Fuel efficiency, technological change, car characteristics

JEL Classification: L62, Q50, R4

Suggested Citation

Matas, Anna and Raymond, Josep Lluis and Domínguez, Andrés, Changes in Fuel Economy: An Analysis of the Spanish Car Market (June 02, 2016). Documents de Treball de l’IEB 2016/15. Available at SSRN: https://ssrn.com/abstract=2796192

Anna Matas (Contact Author)

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Josep Lluis Raymond

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Andrés Domínguez

Autonomous University of Barcelona - Department of Applied Economics ( email )

Departamento de Economía Aplicada
Bellaterra, Barcelona 08193
Spain

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