Over the last few years there has been increasing interest in how the magnitude of the demand elasticities implied by the National Transport Model (NTM) compare with those quoted in the literature. However, direct comparisons are far from straightforward as a wide range of different definitions of both dependent and independent variables tend to be adopted. For example, to compare effects on car traffic with effects on car use, the potential effects of fuel cost on the magnitude of the car stock need to be understood. Similarly, comparisons between findings on the effects of fuel price (pence/litre) with those on fuel cost (pence/km) require an assessment of the determinants of changes in fuel intensity (litres/km). In addition, there is a large body of econometric literature on the determinants of annual fuel demand, which can also assist in the comparison. Addressing all these issues requires a wide-ranging analysis of the causal relationships between the variables that are cited in the literature. This paper reports on the results of an econometric investigation of these relationships using time series data, and the findings are compared with other work in the field. A description is also given of how the results are being used to further refine the Department's National Transport Model. For the covering abstract see ITRD E124693.
Abstract