Oil and macroeconomic (in)stability

Hilde C. Bjørnland () and Vegard Larsen
Authors registered in the RePEc Author Service: Hilde Christiane Bjørnland ()

No No 7/2015, Working Papers from Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School

Abstract: We analyze the role of oil price volatility in reducing U.S. macroeconomic instability. Using a regime-switching structural model we revisit the timing of the Great Moderation and the sources of changes in the volatility of macroeconomic variables. We find that smaller or fewer oil price shocks did not play a major role in explaining the Great Moderation. Instead oil price shocks are recurrent sources of macroeconomic fluctuations. The most important factor reducing macroeconomic variability is a decline in the volatility of other structural shocks (demand and supply). A change to a more responsive monetary policy regime also played a role.

Pages: 45 pages
Date: 2015-06
New Economics Papers: this item is included in nep-ene and nep-mac
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Oil and Macroeconomic (In)stability (2018)
Working Paper: Oil and macroeconomic (in)stability (2017)
Working Paper: Oil and macroeconomic (in)stability (2017)
Working Paper: Oil and macroeconomic (in)stability (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:bny:wpaper:0035

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