Exploring the Impact of Brent Spot Prices, Interest Rates, and Electricity Costs on Vehicle Registrations in Norway

Abstract

This thesis investigates the correlations and potential long-term relationships between vehicle registrations in Norway and several economic indicators, including Brent spot prices, interest rates, and electricity costs. Utilizing Vector Autoregressive (VAR) and Vector Error Correction Model (VECM) analysis, this study explores how these economic variables influence the fluctuations and trends in the registration of vehicles, particularly electric vehicles, in the Norwegian market. The analysis confirmed the existence of at least one long-term relationship, with some models indicating up to two, demonstrating significant impacts of these economic factors on vehicle registrations. The most robust findings were produced by models that excluded outliers, which not only showed the strongest long-term relationship between vehicle registrations and interest rates but also offered the highest forecasting accuracy. This study not only illuminates the dynamics between economic factors and vehicle registrations but also contributes to the understanding of consumer behavior in response to the shift from fossil fuel vehicles to electric vehicles.