ASYMMETRIC PRICE TRANSMISSION IN THE FUEL MARKET OF BOSNIA AND HERZEGOVINA: AN ANALYSIS OF PETROL AND DIESEL PRICE RESPONSES TO OIL PRICE CHANGES

Abstract

The paper explores the phenomenon of asymmetric price adjustments of petroleum products to changes in oil prices on the Bosnian and Herzegovinian market. We examine the existence of an asymmetric response of retail diesel and petrol prices to changes in oil prices, analysing whether there is a slower adjustment in the case of a decrease in oil prices compared to an increase. The study is conducted using monthly data, for the period from 2010 to 2024. The methodological framework includes the Engle–Granger cointegration test, the error correction model, and the Wald test to check for short-term asymmetric effects. The findings show that there is a long-term equilibrium in crude oil and petroleum products prices, with the degree of adjustment in derivatives prices being significant but not complete.