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Do retail gasoline prices respond asymmetrically to cost shocks? The influence of Edgeworth Cycles

Do retail gasoline prices respond asymmetrically to cost shocks? The influence of Edgeworth Cycles Asymmetric price cycles similar to Edgeworth Cycles are appearing in increasingly many retail gasoline markets in the United States and worldwide. The asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks (asymmetric passthrough). This article estimates asymmetric passthrough for the market of Toronto, which exhibits cycles, and decomposes it into two components—that part explainable by the cycles and that part driven by other unknown sources. Significant asymmetric passthrough is found, with increases passed through more quickly than decreases. A significant cause of the finding is the presence of the cycles themselves. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Rand Journal of Economics Wiley

Do retail gasoline prices respond asymmetrically to cost shocks? The influence of Edgeworth Cycles

The Rand Journal of Economics , Volume 40 (3) – Sep 1, 2009

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References (27)

Publisher
Wiley
Copyright
© 2009, RAND.
ISSN
0741-6261
eISSN
1756-2171
DOI
10.1111/j.1756-2171.2009.00078.x
Publisher site
See Article on Publisher Site

Abstract

Asymmetric price cycles similar to Edgeworth Cycles are appearing in increasingly many retail gasoline markets in the United States and worldwide. The asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks (asymmetric passthrough). This article estimates asymmetric passthrough for the market of Toronto, which exhibits cycles, and decomposes it into two components—that part explainable by the cycles and that part driven by other unknown sources. Significant asymmetric passthrough is found, with increases passed through more quickly than decreases. A significant cause of the finding is the presence of the cycles themselves.

Journal

The Rand Journal of EconomicsWiley

Published: Sep 1, 2009

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