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Should single-equation dynamic gasoline demand models include moving average terms?

Date

Authors

Breunig, Robert

Publisher

Pergamon Press

Abstract

We argue that single-equation dynamic demand models applied to estimating gasoline demand should capture the slow evolution of unobservable habits that in part determine vehicle and gasoline usage. Inclusion of unobservable habits implies that single-equation models should include moving-average terms. Ordinary least squares estimation is thus inappropriate. Using examples from Australia and the US, it is shown that estimates of long-run price and income elasticities become much less precise.

Keywords

Keywords: Australia; Dynamic demand models; Gasoline demand; Habit formation; Income elasticities; Moving averages; Ordinary least squares; Single-equation demand analysis; Unobservable; Elasticity; Estimation; Gasoline; Mathematical models; demand elasticity; inco Gasoline demand elasticity; Habit formation; Single-equation demand analysis

URI

http://hdl.handle.net/1885/68795

Collections

ANU Research Publications

Source

Transportation Research: Part D Transport and Environment

Type

Journal article

DOI

10.1016/j.trd.2011.04.006

Restricted until

2037-12-31

Downloads

File

Description

01_Breunig_Should_single-equation_dynamic_2011.pdf (155.95 KB)

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