An Estimation of U.S. Gasoline Demand: A Smooth Time-Varying Cointegration Approach-Wang Yanan Institute for Studies in Economics (WISE), Xiamen University

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作者	Sung Y. Park, Guochang Zhao
正文	In this paper the U.S. gasoline demand from 1976 to 2008 is estimated using a time-varying cointegrating regression. We find that price elasticity increased rapidly during the late 1970s and then decreased until 1987. After a relatively small-scaled "increase-decrease" cycle from 1987 to 2000, the price elasticity rose again after 2000. The time-varying change of the elasticities may be explained by the proportion of gasoline consumption to income and fluctuation of the degree of necessity. The result of the error correction model shows that a deviation from a long-run equilibrium is corrected quickly, and the welfare analysis illustrates there may be a gain by shifting the tax scheme from income tax to gasoline tax.
JEL-Codes：	C51; Q41; H71.
关键词：	Gasoline demand; Time-varying coefficient; Cointegration; Canonical coin-tegration regression; Error-correction model; deadweight loss.