Effects of Gasoline Price Levels on GDP Per Capita: A Crosscountry Analysis
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The effects of the current fall in gas prices across the world are already being hypothesized. This paper attempts to establish the effects of gas price on gross domestic product (GDP) per capita in the year 2002 in 94 different world economies, with the hopes of isolating gas prices’ overall effect on GDP per capita. This paper attempts to specifically isolate these two variables and then examine complementary factors that account for why certain periods of gasoline price changes affected the world in certain ways and what can be expected in the future with forecasted changes in those prices. In addition to gas price, we observed the independent variables consumption, savings, government expenditure and exports (all as percentages of a country’s GDP), as well as a dummy variable of exporter vs. importer which allowed the relationship between gas price and GDP to be further isolated. While this paper is based in economic theory and is related to the subject’s previous literature, the paper also provides a unique view by focusing on the global effect of gas prices in a single year through cross-sectional analysis.