American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Time-Varying Effects of Oil Supply Shocks on the US Economy
American Economic Journal: Macroeconomics
vol. 5,
no. 4, October 2013
(pp. 1–28)
Abstract
Using time-varying BVARs, we find a substantial decline in the shortrun price elasticity of oil demand since the mid-1980s. This finding helps explain why an oil production shortfall of the same magnitude is associated with a stronger response of oil prices and more severe macroeconomic consequences over time, while a similar oil price increase is associated with smaller output effects. Oil supply shocks also account for a smaller fraction of real oil price variability in more recent periods, in contrast to oil demand shocks. The overall effects of oil supply disruptions on the US economy have, however, been modest.Citation
Baumeister, Christiane, and Gert Peersman. 2013. "Time-Varying Effects of Oil Supply Shocks on the US Economy." American Economic Journal: Macroeconomics 5 (4): 1–28. DOI: 10.1257/mac.5.4.1Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E32 Business Fluctuations; Cycles
- Q41 Energy: Demand and Supply
- Q43 Energy and the Macroeconomy