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

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

MPRA Paper from University Library of Munich, Germany

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: E0 E00 Q4 Q43 (search for similar items in EconPapers)
Date: 2023-06-06
New Economics Papers: this item is included in nep-cna, nep-ene and nep-reg
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Related works:
Working Paper: Effects of Government Regulation of Diesel and Petrol Prices on GDP Growth: Evidence from China (2023)
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