Relation of Retail Gasoline and Diesel Prices in Croatia with Crude Oil Prices on World Markets

Karol Szomolányi, Martin Lukáčik and Adriana Lukáčiková

A chapter in Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Hybrid Conference, Dubrovnik, Croatia, 4-6 September, 2023, 2023, pp 51-59 from IRENET - Society for Advancing Innovation and Research in Economy, Zagreb

Abstract: According to many studies, the transmission of oil prices to retail fuel prices is asymmetric. Fuel prices react faster if oil prices rise and more slowly if oil prices fall. We use the simple and dynamic asymmetry models, error correction models, threshold autoregressive cointegration, and an approach based on the adjustment cost function in the linear-exponential form to verify the hypothesis of asymmetric reactions of gasoline and diesel prices in Croatia. The analysis uses a weekly time series of Croatian fuel prices obtained from the European Commission Weekly Oil Bulletin and BRENT oil prices from the US Energy Information Administration. Different standard econometric procedures lead to different results. Nevertheless, the approach based on the linear-exponential lost function confirmed the price asymmetries in the Croatian market.

Keywords: asymmetry; retail gasoline prices; error correction model; threshold autoregressive cointegration; linear-exponential adjustment cost function; generalised method of moments; Croatia (search for similar items in EconPapers)
JEL-codes: C26 C51 Q41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:entr23:302068

DOI: 10.54820/entrenova-2023-0005

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