Estimating Elasticity of Transport Fuel Demand in Pakistan

Muhammad Omer

No 96, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: This study investigates the fuel demand elasticities separately for petrol, diesel, and CNG using data from July 2004 to June 2015 for Pakistan. The results show that fuel demands are generally (own and cross price) inelastic in the short run, but are relatively elastic in the long run. Though these short run estimates are in line with the literature, the long run estimates differ considerably. Administrative intervention in fuel pricing, load management in CNG sector and its close to perfect substitutability with petrol is driving this long run price elasticity result. Moreover, income elasticity estimates suggest that petrol is a normal good while diesel and CNG are inferior goods. The estimates remain robust when lag demands of substitutes, the exchange rate, and real fuel prices are separately included in the model.

Keywords: Fuel Price; Elasticity; Transport Sector (search for similar items in EconPapers)
JEL-codes: L90 Q40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-03
New Economics Papers: this item is included in nep-ene and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sbp.org.pk/publications/wpapers/2018/wp96.pdf First version, 2018 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbp.org.pk/publications/wpapers/2018/wp96.pdf [301 Moved Permanently]--> https://www.sbp.org.pk/publications/wpapers/2018/wp96.pdf)

Related works:
Working Paper: Estimating Elasticity of Transport Fuel Demand in Pakistan (2018)
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:sbp:wpaper:96

Access Statistics for this paper

More papers in SBP Working Paper Series from State Bank of Pakistan, Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Faisal Saleem ().