Stick or Carrot? Asymmetric Responses to Vehicle Registration Taxes in Norway

Vehicle registrations have been shown to strongly react to tax reforms aimed at reducing CO2 emissions from passengers’ cars, but are the effects equally strong for positive and negative tax changes? The literature on asymmetric reactions to price and tax changes has documented asymmetries for everyday goods but has not yet considered durables. We leverage multiple vehicle registration tax (VRT) reforms in Norway and estimate their impact on within car-model substitutions. We estimate stronger effects for cars receiving tax cuts and rebates than for those affected by tax increases. The corresponding estimated elasticity is − 1.99 for VRT decreases and 0.77 for increases. As consumers may also substitute across car models, our estimates represent a lower bound.

Measuring volatility spillovers and asymmetric responses of Agri commodity prices: evidence from spices and rubber futures in India

Purpose This paper aims to investigate price responses and volatility spillovers between commodity spot and futures markets. The study ultimately seeks the evidence-based claims on the efficiency of the long run and short run horizontal price transmissions from futures markets to spot markets. Design/methodology/approach This study used the most recent daily price series of pepper, cardamom and rubber, during the period 2004–2019, use “cointegration-ECM-GARCH framework” and verify the persisting validity of the “expectancy theory” of commodity futures pricing. Findings The results offer overwhelming evidence of futures market dominance in the price discoveries and volatility spillovers in spot markets. However, this paper finds asymmetric responses between cash and futures prices across markets. The hedging efficiency of futures contracts is commodities specific’ where spices futures are more efficient than the rubber futures. Practical implications The study passes on vital information to the producers and traders of spices and rubber who have a potential interest in the use of futures contracts to make profits from arbitrage between futures and cash markets. Originality/value The paper is unique in terms of understanding asymmetric price linkages in markets for plantation crops.