Re-examining the asymmetric gasoline pricing mechanism in EU: a note on a panel threshold analysis

ABSTRACT

We employ a pooled panel threshold model within an error correction framework to re-investigate the ‘rockets and feathers’ hypothesis. The empirical results confirm the superiority of the threshold model compared to the baseline linear specifications, while attributing the asymmetric gasoline adjustment mechanism to Exchange Rate Pass Through (ERPT).

KEYWORDS:

• Threshold
• gasoline asymmetry
• ERPT
• error correction model
• EU

JEL CLASSIFICATION:

• C24
• L16

Acknowledgments

We would like to thank the Editor Professor Mark Taylor for giving us the opportunity to revise and thus to improve our article and the two anonymous reviewers of this journal for their constructive and fruitful comments. All errors belong to the authors. Usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ To conserve space the results are available from the authors.

² The results are available upon the authors’ request.