Regulation of Petrol and Diesel Prices and their Effects on GDP Growth: Evidence from China

Markus Brueckner, Haidi Hong and Joaquin Vespignani
Authors registered in the RePEc Author Service: Markus Brueckner

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper presents estimates of the effects that government regulation of diesel and petrol prices has on GDP growth. Theory suggests that when supply curves are convex, a decrease in the regulatory price has a larger effect on output than a tantamount increase. Motivated by this theoretical insight, we specify VAR models with asymmetric effects of positive and negative changes in the regulatory prices of diesel and petrol. We estimate the VAR models on quarterly data from China’s national accounts during the period Q1 1998 to Q4 2018. Our main findings are that: (i) negative growth rates of regulatory diesel and petrol prices significantly reduce GDP growth; (ii) positive growth rates of regulatory diesel and petrol prices have a positive, but quantitatively small and statistically insignificant effect on GDP growth.

Keywords: GDP growth; energy price regulation (search for similar items in EconPapers)
JEL-codes: E02 K20 Q43 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2023-03
New Economics Papers: this item is included in nep-cna, nep-ene and nep-reg
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Related works:
Working Paper: Regulation of petrol and diesel prices and their effects on GDP growth: evidence from China (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2023-17

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