Energy price volatility affects decisions to purchase energy using capital: Motor vehicles
Robert Kaufmann
Energy Economics, 2023, vol. 126, issue C
Abstract:
I investigate how energy price volatility affects consumer decisions to purchase durable, energy using capital, motor vehicles. A cointegrating vector autoregression (CVAR) model indicates that; (1) high price volatility reduces the negative effect of motor gasoline prices on monthly purchases of motor vehicles, (2) consumers consider passenger cars to be an inferior good and this drives the substitution of light trucks for passenger cars, (3) the own price elasticity of demand for vehicles is about −0.3, which is consistent with estimates used to justify The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Models Years 2021–2026 Passenger Cars and Light Trucks. Simulating the CVAR model indicates that implementing an energy tax rapidly or during a period of low price volatility has a greater effect on motor vehicle sales than implementing the same tax slowly or during a period of high price volatility. Together these results suggest that more research should focus on how energy price volatility affects consumer decisions to purchase energy using capital.
Keywords: Climate policy; Price volatility; Vehicle purchases (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988323004139
Full text for ScienceDirect subscribers only
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:eee:eneeco:v:126:y:2023:i:c:s0140988323004139
DOI: 10.1016/j.eneco.2023.106915
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
Bibliographic data for series maintained by Catherine Liu ().