Petrol and Crude Oil Prices: Asymmetric Price Transmission

Szymon Wlazlowski

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the relationship between crude oil prices, the dollar-pound exchange rate and petrol prices in the UK over the period 1982-2001. Quantitative methods were used to examine the existence of the long-run equilibrium and test for the presence of asymmetric patterns in the short-run responses to upstream price changes. Also the degree of asymmetry in the adjustment towards long-run equilibrium was analysed. Results confirm that short-run response is greater for increases in upstream prices and that the long-run equilibrium is reached faster after increase in upstream prices. Thus the opinion held by drivers in the UK is confirmed. Detailed analysis confirmed close relationship between the asymmetry and the size and change in the market margin.

Keywords: Asymmetric Price Transmission; rockets and feathers; nonlinearity; price tranmission (search for similar items in EconPapers)
JEL-codes: D40 D49 Q40 (search for similar items in EconPapers)
Date: 2001, Revised 2001
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1486

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