| Registro completo |
| Provedor de dados: |
AgEcon
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| País: |
United States
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| Título: |
Demand and price volatility: rational habits in international gasoline demand
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| Autores: |
Scott, K. Rebecca
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| Data: |
2012-03-26
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| Ano: |
2012
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| Palavras-chave: |
Gasoline demand
Rational habits
Price elasticity
Research Methods/ Statistical Methods
H30
Q40
Q41
Q50
R40
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| Resumo: |
The combination of habits and a forward outlook suggests that consumers will be sensitive not just to prices but to price dynamics. In particular, rational habits models suggest 1. that price volatility and uncertainty will reduce demand for a habit-forming good and 2. that such volatility will dampen demands responsiveness to price. These two implications can be tested by augmenting a traditional partial-adjustment or error-correction model of demand. I apply this augmented model to data on gasoline consumption, as rational habits provide a succinct representation for the investment and behavioral decisions that determine gasoline usage. The trade-o¤s among 2SLS, system GMM, and pooled mean group (PMG) estimators are considered, and my preferred PMG estimator provides evidence for the two implications of rational habits in a panel of 29 countries for the years 1990-2009. The sensitivity of certain results to the choice of estimator others a cautionary illustration of the cost of assumptions such as coefficient heterogeneity. Given the evidence uncovered in favor of rational gasoline habits, such habits may help to explain some of the cross-country variation in "total" price elasticity. These habits also imply that the effect of price volatility must be taken into account when projecting the impacts of potential policies on gasoline consumption.
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| Tipo: |
Working Paper
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| Idioma: |
Inglês
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| Identificador: |
http://purl.umn.edu/122891
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| Relação: |
University of California, Berkeley>Department of Agricultural and Resource Economics>CUDARE Working Papers
CUDARE Working Papers
1122
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| Formato: |
70
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