Gasoline price asymmetries in the Euro Zone

Polemis, Michail and Fotis, Panagiotis (2011): Gasoline price asymmetries in the Euro Zone.

Abstract

This paper uses the generalized method of moments (GMM) estimation to a panel data error correction model (ECM) in order to measure the asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail gasoline price respectively. For this purpose, we use an updated data set of weekly observations covering the period from January 2000 to February 2011 for eleven euro zone countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal and Spain). The results favor the common perception that retail and wholesale gasoline prices respond asymmetrically to cost increases and decreases.

• Item Type: MPRA Paper
• Language: English
• Keywords: Generalized method of moments; panel data; asymmetries; euro zone; error correction models
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models

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