Authors : Matthew Femi Olayiwola and Solly Matshonisa Seeletse
Abstract: In this study, the relationship between the quarterly data of consumption and price of petrol from 2005-2017 is considered. The two series are found to be integrated of the same order I(1) based on the ADF test. Though both variables do not have long-run equilibrium relationship based on Engle-Granger and Johansen tests but there exists a unidirectional causality from consumption to the retail price of petrol. The VAR Models estimated are found to be significant and stable and without any defects (i.e., no heteroskedasticity, no serial correlation and residuals of these VAR Models are found to be normally distributed).
Matthew Femi Olayiwola and Solly Matshonisa Seeletse, 2020. South African Petrol Price and Consumption Cointegration Analysis. Journal of Engineering and Applied Sciences, 15: 1579-1588.