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UK Freight Demand: Elasticities and Decoupling

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Document pages: 41 pages

Abstract: The aim of this study is to estimate road freight demand in the UK for the period 1956-2003 and to assess the occurrence of decoupling between economic activity and freight demand as discussed in McKinnon (2006). As models with a deterministic trend cannot accommodate a long-run relationship between the variables in the freight demand, one needs to model a relationship between growth rates rather than between the levels of the variables. Models with a stochastic trend gave better results and confirmed that the pace decoupling during the last years of the sample period increased. Price and income elasticities were estimated to be about 18 percent and 65 percent respectively.

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