Work detail

Car demand modelling in the Czech Republic

Author: Bc. Adam Rückl
Year: 2014 - summer
Leaders: Mgr. Barbara Pertold-Gebicka M.A., Ph.D.
Work type: Bachelors
Language: English
Pages: 71
Awards and prizes:
Abstract: The main purpose of this thesis is to construct a model of passenger cars demand and estimate
it using data on new car registrations from the Czech Republic.
The constructed model takes
into account factors affecting not only the demand, but
also the supply, as both of these variables
form a simultaneous equations system. In order to estimate the model consistently, the
econometric theory of simultaneous equations model is presented. At first the basic notations
are introduced, the inconsisten
cy of ordinary least squares estimates is proved and consistent
methods of estimation are described, notably the two stage least squares and the indirect least
squares methods.
Observation of the data suggests that new passenger cars registrations in the C
zech Republic
were influenced by a specific taxation policy, which up to April 2009 did not allow the value
added tax deduction in case of passenger cars. A large proportion of passenger cars were
therefore registered as light utility vehicles. This fact h
as to be taken into account when studying
the passenger cars demand. Results of the estimation by the two stage least squares method
showed that the demand for new passenger in the Czech Republic is elastic in price and income.
Significant sensitivity of t
he demand was observed also with respect to used cars price, which
act as substitutes to new cars. In case of the fuel price, no relevant effect on new cars sold was
detected. The highest impact is attributed to seasonality, which probably acts as a demons
of consumers ́ subjective preferences




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