The Effects of Changes in Gasoline Prices on Hybrid Car Sales in the U.S. Open Access

Abstract

Since automobiles generate about 25 percent of the greenhouse gas emissions in the U.S., increasing the use of alternative fuel vehicles can greatly help ease the problem. This paper employed a vector error correction model to examine the relationship between hybrid car sales and gasoline prices in the U.S. by using a time series monthly dataset on car sales, gasoline prices and average miles traveled per capita from January 2000 to December 2013. I find that there exists a long-run equilibrium between hybrid car sales and gasoline prices, and that gasoline prices, in the long term, have a large positive effect on hybrid car sales. Furthermore, compared with total car sales, hybrid car sales are more sensitive to changes in gasoline prices.

Table of Contents

Table of Contents

1. Introduction.............................................................................................1
2. Literature Review.............................3
3. Methodology.......................6
4. Data......................9
5. Results..............................10
6. Conclusion............................16
7. References...........................18
8. Appendix............................20

List of Tables

Table 1: Summary Statistics.......................20

Table 2: Estimate Result of the Change in Hybrid Car Sales Model....................21

Table 3: Estimate Result of the Growth Rate of Total Car Sales Model (1).......22

Table 4: Estimate Result of the Growth Rate of Total Car Sales Model (2)...23

Table 5: Forecasting Results.....................24

Table 6: Johansen Test Results...................24

List of Figures

Figure 1: Monthly Hybrid Car Sales...................25

Figure 2: Monthly Total Car Sales.................26

Figure 3: Monthly Real Gasoline Prices...................27

Figure 4: Monthly Average Miles Travelled Per Capita............28

Figure 5: Forecasting Residuals.....................29

About this Honors Thesis

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School	Emory College
Department	Economics
Degree	BS
Submission	Honors Thesis
Language	English
Research Field	Economics, General
Keyword	Hybrid Car Sales Gasoline Prices
Committee Chair / Thesis Advisor	Lagalo, Latika , Emory University
Committee Members	Batterson, Steven L, Emory University Dezhbakhsh, Hashem, Emory University

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