Recent legislation has increased the Corporate Average Fuel Economy (CAFE) standard by 40 percent, which represents the first major increase in the standard since its creation in 1975. Previous analysis of the CAFE standard has analyzed the short run effects (1-2 years), in which vehicle...

This paper uses a unique data set of monthly new vehicle sales by detailed model from 1978-2007, and implements a new identification strategy to estimate the effect of the price of gasoline on consumer demand for fuel economy. We control for unobserved vehicle and consumer characteristics by...