Welfare Effects of Gas Price Fluctuations

Florian Kuhn, Matthias Kehrig and Nicolas L. Ziebarth

No 20008, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The share of gasoline consumption in household expenditures decreases with income, gasoline demand being least elastic for low-income households. Based on this empirical evidence for non-homotheticities, we develop a quantitative heterogeneous-agent general equilibrium model to quantify the distributional consequences of oil price shocks. Although oil price shocks have small aggregate effects, they hurt low-income households considerably with costs to lifetime utility two to three times larger for those in the bottom decile of income relative to those in the top decile. Additionally, the 2014/15 oil glut depressed gasoline prices, which delivered comparable welfare benefits to the 2018 tax cuts.

JEL-codes: D12 E22 H22 (search for similar items in EconPapers)
Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20008 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:20008

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20008

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().