Working Paper: NBER ID: w14450
Authors: Shanjun Li; Roger Von Haefen; Christopher Timmins
Abstract: Exploiting a rich data set of passenger vehicle registrations in twenty U.S. metropolitan statistical areas from 1997 to 2005, we examine the effects of gasoline prices on the automotive fleet's composition. We find that high gasoline prices affect fleet fuel economy through two channels: (1) shifting new auto purchases towards more fuel-efficient vehicles, and (2) speeding the scrappage of older, less fuel-efficient used vehicles. Policy simulations based on our econometric estimates suggest that a 10% increase in gasoline prices from 2005 levels will generate a 0.22% increase in fleet fuel economy in the short run and a 2.04% increase in the long run.
Keywords: Gasoline Prices; Fleet Fuel Economy; Vehicle Scrappage
JEL Codes: H23; L62; Q31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Gasoline prices (L90) | Purchase of fuel-efficient vehicles (R48) |
| Gasoline prices (L90) | Fleet fuel economy (L92) |
| Gasoline prices (L90) | Scrappage of older, less fuel-efficient vehicles (L99) |