A Dynamic General Equilibrium Model of Driving, Gasoline Use and Vehicle Fuel Efficiency

Chao Wei

Review of Economic Dynamics, 2013, vol. 16, issue 4, 650-667

Abstract: The paper constructs a dynamic general equilibrium model to study the endogenous determination of gasoline use, driving and vehicle fuel efficiency. Before vehicles are produced, their fuel efficiency can be chosen optimally. Once produced, their fuel efficiency cannot be changed. The model generates endogenously different short-run and long-run price elasticities of gasoline use, with their magnitudes well within the region of plausible estimates in the empirical literature. The paper shows that although raising gasoline taxes and tightening the CAFE standard both reduce gasoline use in the long run, they are different in terms of the transmission mechanism, magnitudes of responses and dynamic paths of key endogenous variables. (Copyright: Elsevier)

Keywords: Gasoline use; Fuel efficiency; Vehicle miles of travel; CAFE; Gasoline taxes (search for similar items in EconPapers)
JEL-codes: E22 Q43 Q48 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (16)

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DOI: 10.1016/j.red.2012.11.004

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