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Identifying the Rebound: Evidence from a German Household Panel

Abstract:
Using a panel of household travel diary data collected in Germany between 1997 and 2005, this study assesses the effectiveness of fuel efficiency improvements by estimating the rebound effect, which measures the extent to which higher efficiency causes additional travel. Following a theoretical discussion outlining three alternative definitions of the rebound effect, the econometric analysis generates corresponding estimates using panel methods to control for the effects of unobservables that could otherwise produce spurious results. Our results, which range between 57% and 67%, indicate a rebound that is substantially larger than obtained in other studies, calling into question the efficacy of policies targeted at reducing energy consumption via technological efficiency.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Energy Efficiency

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, C51: Model Construction and Estimation, Q54: Climate; Natural Disasters and Their Management; Global Warming, Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling, D12: Consumer Economics: Empirical Analysis

Keywords: Automobile travel, rebound effect, panel models, Germany, CAFÉ, externalities

DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No4-7

Published in Volume 29, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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