Forecasting Automobile Demand for Economies in Transition: A Dynamic Simultaneous-Equation System Approach

Sameer A. Abu-Eisheh and Fred L. Mannering

Transportation Planning and Technology, 2002, vol. 25, issue 4, 311-331

Abstract: The dynamic characteristics of automobile demand are critical for national economic and revenue predictions. Automobile demand and ownership level forecasts are also the basis for travel demand models, land-use-transport interaction models, and transport policies and regulations. In this article, a dynamic automobile demand simulation model is developed utilizing a simultaneous-equation system. The system considers the interaction between supply and demand and the resulting equilibrium. Although forecasting automobile demand has been previously investigated, it has not been within such a dynamic simulation framework. Our model includes the current and lagged automobile quantity and price variables; economic, financial and operating cost variables; and income and government policy variables. The capabilities of the model are then demonstrated through performing a number of simulation experiments considering various growth-development scenarios, changes in operating costs, government policies towards automobile imports, and demographic/employment shifts. Relevant tests are applied to examine the econometric specifications and to evaluate the simulation model performance.

Date: 2002
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Citations: View citations in EconPapers (5)

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DOI: 10.1080/0308106022000019026

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