Regulation of petrol and diesel prices and their effects on GDP growth: evidence from China

Marcus Brueckner (), Haidi Hong () and Joaquin Vespignani
Additional contact information
Marcus Brueckner: Research School of Economics, Australian National University, Australia, https://cbe.anu.edu.au/about/staff-directory/professor-markus-brueckner
Haidi Hong: Independent Competition and Regulatory Commission, Australia, https://www.icrc.act.gov.au/

No 2023-02, Working Papers from University of Tasmania, Tasmanian School of Business and Economics

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 in the regulatory price. 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 statistics 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)
Pages: 24 pages
Date: 2023
New Economics Papers: this item is included in nep-cna, nep-ene and nep-reg
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Published by the University of Tasmania. Discussion paper 2023-02

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https://eprints.utas.edu.au/47700/1/2023-02_Brueckner_Hong_Vespignani.pdf

Related works:
Working Paper: Regulation of Petrol and Diesel Prices and their Effects on GDP Growth: Evidence from China (2023)
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