{"title":"Do fluctuations in global crude oil prices have an asymmetric effect on oil product pricing in India?","authors":"Abdhut Deheri, Stefy Carmel","doi":"10.1007/s10644-024-09599-9","DOIUrl":null,"url":null,"abstract":"<p>This study aims to examine the existence of asymmetry and nonlinearity in the influence of global crude oil price shocks on the pricing of oil products in India during the period spanning from April 2000 to March 2022. Novel symmetry and linearity tests, notably slope and impulse response tests, were used for this purpose. The findings of the slope test indicate the absence of nonlinearity in the reaction of most oil product prices to global crude oil price shocks. In contrast, the results obtained from the impulse response test indicate that except for liquid petroleum gas, all oil product prices exhibit asymmetric responses to both positive and negative crude oil shocks of varying magnitudes. The results align with previous research on the transmission of crude oil prices to oil product prices. Furthermore, these findings confirm the existence of the rockets-and-feathers phenomenon within the Indian oil product market. From a policy perspective, the findings indicate that it would be prudent for the government to contemplate the implementation of tax reductions on oil products. This approach would aid in ensuring a symmetric response of oil product pricing to global changes in crude oil prices and is projected to decrease the welfare loss incurred by consumers as a result of asymmetry.</p>","PeriodicalId":46127,"journal":{"name":"Economic Change and Restructuring","volume":"64 1","pages":""},"PeriodicalIF":4.0000,"publicationDate":"2024-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Change and Restructuring","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s10644-024-09599-9","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This study aims to examine the existence of asymmetry and nonlinearity in the influence of global crude oil price shocks on the pricing of oil products in India during the period spanning from April 2000 to March 2022. Novel symmetry and linearity tests, notably slope and impulse response tests, were used for this purpose. The findings of the slope test indicate the absence of nonlinearity in the reaction of most oil product prices to global crude oil price shocks. In contrast, the results obtained from the impulse response test indicate that except for liquid petroleum gas, all oil product prices exhibit asymmetric responses to both positive and negative crude oil shocks of varying magnitudes. The results align with previous research on the transmission of crude oil prices to oil product prices. Furthermore, these findings confirm the existence of the rockets-and-feathers phenomenon within the Indian oil product market. From a policy perspective, the findings indicate that it would be prudent for the government to contemplate the implementation of tax reductions on oil products. This approach would aid in ensuring a symmetric response of oil product pricing to global changes in crude oil prices and is projected to decrease the welfare loss incurred by consumers as a result of asymmetry.
期刊介绍：
Economic Change and Restructuring has been accepted for SSCI and will get its first Impact Factor in 2020!Since the early 1990s fundamental changes in the world economy, under the auspices of increasing globalisation, have taken place
On one hand, the disappearance of the centrally planned economies and the progressive formation of market-oriented economies, have brought about countless systematic changes, where new economic structures, institutions, competences and skills involve complex processes, changes which are still underway and which necessitate adaptation and restructuring to form competitive market economies.
On the other hand, many developing economies are making great strides as regards economic reform and liberalisation, and are emerging as new global players. They show an innovative capacity to position themselves in the global economy and to compete with industrialised countries, which are generally believed to be witnessing the rapid erosion of their established positions. These developments are accompanied by the exacerbation of the world competition.
Both processes involve transition and the emerging economies, in searching for a new role and scope for public policies and for a new balance between public and private partnership, seem to currently be converging, especially with respect to the policies needed to create appropriate and effective market institutions and integrated reform policies, and to increase the standards of the population''s education levels.
Thus, liberalisation and development policies, in attempting to strike a difficult balance between social and environmental needs, must be integrated more coherently. This complexity calls for new analytical and empirical approaches that can explain these new phenomena, which often go beyond the over-simplified facts and conventional ''wisdom'' that emerged at the start of the transition in the early 1990s.
Economic Change and Restructuring (formerly ''Economics of Planning''), by keeping abreast of developments affecting both transitional and emerging economies, is aimed to attract original empirical and policy analysis contributions that are focused on various issues, including macroeconomic analysis, fiscal issues, finance and banking, industrial and trade development, and regional and local development issues.
The journal aspires to publish cutting edge research and to serve as a forum for economists and policymakers working in these fields.Officially cited as: Econ Change Restruct
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