Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

Yufeng Chen, Guobin Huang and Lihua Ma
Additional contact information
Yufeng Chen: Center for Studies of Modern Business, Zhejiang Gongshang University, Hangzhou 310018, China
Guobin Huang: School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China
Lihua Ma: School of Economics, Zhejiang Gongshang University, Hangzhou 310018, China

Sustainability, 2017, vol. 9, issue 3, 1-19

Abstract: This paper employs an asymmetric error-correction model (AECM), and uses monthly data on wholesale prices of gasoline and diesel products in China and international crude oil prices from February 2006 to October 2013 to examine whether China’s gasoline and diesel prices adjust asymmetrically to international crude oil price changes. Our empirical results suggest that increases and decreases in international oil prices have asymmetric effects on both wholesale prices of gasoline and diesel fuel in China, and that both increases and decreases in international oil prices have a greater effect on diesel prices than on gasoline prices in China. If there is no change in the maximum retail price, the asymmetry results from the transmission of wholesale prices in China with international oil prices. However, if there is a change in maximum retail prices, both international oil prices and maximum retail prices cause the asymmetry.

Keywords: gasoline price; diesel price; asymmetry; transmission; maximum retail price (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/9/3/381/pdf (application/pdf)
https://www.mdpi.com/2071-1050/9/3/381/ (text/html)

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:gam:jsusta:v:9:y:2017:i:3:p:381-:d:92312

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().