Our task is to estimate relative growth in a given price with time. We use the ratio of price index, P(t), and GDP per capita in current prices, Y(t) (the idea borrowed from V.Kossov):
Z(t)=P(t)/Y(t)
Figure 1 presents the evolution of the price index of motor fuel since 1935 (obtained from the BLS) and Figure 2 – nominal GDP per capita. The share of motor fuel price in GDP per capita can be presented as a function of Y as well as time. Figure 3 shows that there exist a long-term negative trend for Z(t) (notice the log-log scale) with two major fluctuations. The trend looks sustainable and deviations seem to be of transient character. Therefore, one can expect the fall in Z in the near future – motor fuel will be falling against GDP per capita. Oil price is likely to fall as well. Figure 4 presents log(Z) as a function of time.
Figure 1. The consumer price index of motor fuel (not seasonally adjusted).
Figure 2. Nominal GDP per capita
Figure 3. LogZ vs. GDP per capita.
Figure 4. LogZ vs. time
Z(t)=P(t)/Y(t)
Figure 1 presents the evolution of the price index of motor fuel since 1935 (obtained from the BLS) and Figure 2 – nominal GDP per capita. The share of motor fuel price in GDP per capita can be presented as a function of Y as well as time. Figure 3 shows that there exist a long-term negative trend for Z(t) (notice the log-log scale) with two major fluctuations. The trend looks sustainable and deviations seem to be of transient character. Therefore, one can expect the fall in Z in the near future – motor fuel will be falling against GDP per capita. Oil price is likely to fall as well. Figure 4 presents log(Z) as a function of time.
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