Austerity and Fuel Consumption in Greece: An Empirical Investigation
Greek economic crisis in the last years and the subsequent austerity policy measures resulted to a decline in consumers’ income. This paper investigates empirically the Greek consumers’ reactions to income changes regarding their consumption of different types of fuels during the period 2007-2011. The empirical findings suggest that fuel consumption elasticity of income is different among different types of fuels. Furthermore the income elasticity is different among different Greek geographic regions. More specifically, fuels with high consumption i.e. 95 RON unleaded gasoline and diesel-bio fuels are found to be income inelastic as compared to fuels with low consumption i.e. 98-100 RON unleaded gasoline and new super gasoline LRP. Furthermore, for the high consumed fuels, consumers’ behavior patterns to income changes in the island are opposite to that in the rest Greek territory.