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Asymmetries in US demand for gasoline
Author(s) -
Baghestani Hamid,
Genc Ismail,
Kherfi Samer
Publication year - 2016
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/opec.12062
Subject(s) - economics , gasoline , consumption (sociology) , demand curve , econometrics , microeconomics , chemistry , social science , sociology , organic chemistry
Many studies have investigated the asymmetric responses of energy demand to changes in income and price. In estimating the US demand function for gasoline, we also consider consumer sentiment as a determining factor. In line with the income ratchet effect in consumption, our findings for 1991 Q 1–2015 Q 1 indicate that gasoline demand asymmetrically responds to deviation of income from its long‐run trend. Similar asymmetric responses are found with respect to deviation of consumer sentiment from its long‐run trend. In contrast, gasoline demand responds symmetrically to the deviation of price from its long‐run trend and to the gap between actual and desired spending. Further results indicate that gasoline demand is price‐inelastic, income‐inelastic and inelastic with respect to consumer sentiment both in the short and long run.