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The Effect of Improved Fuel Economy on Vehicle Miles Traveled: Estimating the Rebound Effect Using U.S. State Data, 1966-2001

Author(s): Small, Kenneth A; Van Dender, Kurt | Abstract: We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a panel of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and interacts the rebound effect with income. At sample averages of variables, our 3SLS estimates of the short- and long-run rebound effect are 4.7% and 22.0%. But they decline substantially with income: with variables at 1997-2001 levels they become 2.6% and 12.1%, considerably smaller than typically assumed for policy analysis.



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The Effect of Improved Fuel Economy on Vehicle Miles Traveled: Estimating the Rebound Effect Using U.S. State Data, 1966-2001

https://escholarship.org/uc/item/1h6141nj

Author(s): Small, Kenneth A; Van Dender, Kurt | Abstract: We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a panel of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and interacts the rebound effect with income. At sample averages of variables, our 3SLS estimates of the short- and long-run rebound effect are 4.7% and 22.0%. But they decline substantially with income: with variables at 1997-2001 levels they become 2.6% and 12.1%, considerably smaller than typically assumed for policy analysis.



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https://escholarship.org/uc/item/1h6141nj

The Effect of Improved Fuel Economy on Vehicle Miles Traveled: Estimating the Rebound Effect Using U.S. State Data, 1966-2001

Author(s): Small, Kenneth A; Van Dender, Kurt | Abstract: We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a panel of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and interacts the rebound effect with income. At sample averages of variables, our 3SLS estimates of the short- and long-run rebound effect are 4.7% and 22.0%. But they decline substantially with income: with variables at 1997-2001 levels they become 2.6% and 12.1%, considerably smaller than typically assumed for policy analysis.

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