Coglianese, John; Davis, Lucas W.; Kilian, Lutz; Stock, … - 2016
Least-squares estimates of the response of gasoline consumption to a change in the gasoline price are biased toward … prices using gasoline taxes, but this approach tends to yield implausibly large price elasticities. We demonstrate that … zero, given the endogeneity of gasoline prices. A seemingly natural solution to this problem is to instrument for gasoline …