Elasticities of gasoline demand in Switzerland

Baranzini, Andrea ; Weber, Sylvain

(Cahier de recherche ; HES-SO/HEG-GE/C--12/1/2--CH)

Using co-integration techniques, we investigate the determinants of gasoline and fuel demands in Switzerland over the period 1970-2008. In particular, we focus on the impact of prices and estimate the demand price elasticities. In the short run, we obtain very weak price elasticities of -0.09 for gasoline demand and -0.08 for fuel demand. In the long run, the corresponding estimates are -0.34 and... Plus

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    Summary
    Using co-integration techniques, we investigate the determinants of gasoline and fuel demands in Switzerland over the period 1970-2008. In particular, we focus on the impact of prices and estimate the demand price elasticities. In the short run, we obtain very weak price elasticities of -0.09 for gasoline demand and -0.08 for fuel demand. In the long run, the corresponding estimates are -0.34 and -0.27. The exceptionally rich dataset we built allows us to work with quarterly data and with more explicative variables than usual in this literature. In addition to the traditional price and income variables, we account for variables like vehicles stocks, fuel prices in neighbouring countries, oil shocks and fuel taxes. All of these additional variables are found to be significant determinants of demand.