Transport Fuel Demand for Non-OECD Countries

This paper reassesses the links between transport fuels consumption, (gasoline and diesel) income, and prices for a sample of non-OECD countries using kernel smoothing methods. The focus of the article questions functional form assumptions underlying most previous research, the majority assuming linear relationships. We employ non-parametric techniques that allow for non-linearity and variable selection. We show that inclusion of non-linearities in demand equations is necessary for obtaining reliable estimates of elasticities. These results are useful for policy modellers who use need estimates of elasticities for policy analysis and energy planning