Question

The file P11_69.xlsx contains data on gasoline consumption and several economic variables. The variables are gasoline consumption for passenger cars (GasUsed), service station price excluding taxes (SSPrice), retail price of gasoline including state and federal taxes (RPrice), Consumer Price Index for all items (CPI), Consumer Price Index for public transportation (CPIT), number of registered passenger cars (Cars), average miles traveled per gallon (MPG), and real per capita disposable income (DispInc).
a. Regress GasUsed linearly versus CPIT, Cars, MPG, DispInc, and DefRPrice, where DefRPrice is the deflated retail price of gasoline (RPrice divided by CPI). What signs would you expect the coefficients to have? Do they have these signs? Which of the coefficients are statistically significant at the 5% significance level?
b. Suppose the government makes the claim that for every one cent of tax on gasoline, there will be a $1 billion increase in tax revenue. Use the estimated equation in part a to support or refute the government’s claim.



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  • CreatedApril 01, 2015
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