Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/70521 
Year of Publication: 
2009
Series/Report no.: 
Working Paper No. 2009-15
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
This paper uses a unique data set of monthly new vehicle sales by detailed model from 1978-2007, and implements a new identification strategy to estimate the effect of the price of gasoline on consumer demand for fuel economy. We control for unobserved vehicle and consumer characteristics by using within model-year changes in the price of gasoline and vehicle sales. We find a significant demand response, as nearly half of the decline in market share of U.S. manufacturers from 2002-2007 was due to the increase in the price of gasoline. On the other hand, an increase in the gasoline tax would only modestly affect average fuel economy.
Document Type: 
Working Paper

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