Pump prices in Morocco and oil price: an analysis of transmission

Abstract

The observation of pump price levels in Morocco and the price of oil raises many questions among the public and economists, who note a certain discrepancy between the level of the price of crude oil and that of pump prices. This phenomenon, known in the literature as "Rockets and feathers", expresses a certain asymmetry between these two prices, whereby prices at the pump react quickly to increases in the price of crude oil, but only slowly to decreases in the latter. Thus, this paper aims to test this asymmetry hypothesis for the case of Morocco using NARDL (nonlinear autoregressive distributed lags) model throughout 49 fortnights (from 16/01/2016 to 16/12/2017). The results of this study did not confirm the presence of a certain asymmetry in either the short or long term between the price of refined gasoil at import and retail price.

Keywords: Transmission; Asymmetry; NARDL; pump prices; Morocco

Classification JEL : L11 ; L51

Paper type : Empirical research