 Do airfares respond asymmetrically to fuel price changes? A multiple threshold nonlinear ARDL modelDebdatta Pal and Subrata K. Mitra Energy Economics, 2022, vol. 111, issue C Abstract: This paper elucidates, whether airfares respond asymmetrically to fuel price changes. Recent literature suggests conflicting evidence on whether airfares respond rapidly to the increase in fuel price than to the decrease. Using monthly U.S. data spreading over January 2000 to June 2019 and by employing a multiple threshold nonlinear autoregressive distributed lag model, this paper doesn't surface any evidence of asymmetric adjustments of airfares to the changes in the prices of crude oil and jet fuel. Although the statistical results do not suggest a mechanism that conclusively identifies different adjustment rates in airfares relative to the difference in the prices for fuel, this absence does not support the presumption that the response of airfares to the changes in fuel prices is always symmetric. The results are quite robust to the splitting of the regressors into deciles. Keywords: Airfares; Crude oil price; Asymmetry; Multiple threshold NARDL (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:111:y:2022:i:c:s0140988322002729 DOI: 10.1016/j.eneco.2022.106113 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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