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Abstract

In this paper, we estimate the long-run gasoline price and income elasticity of VMT for the period 2000-2008. Most of the previous studies use the very common classes of time series methods that are the autoregressive integrated moving average (ARIMA) models. We advance the analytical framework to include a vector error-correction (VEC) regression technique that overcomes several limitations of ARIMA models. We find that long-run gasoline price elasticity to VMT ranges from -0.31 to -0.88, and income elasticity ranges from 0.18 to 0.49.

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