The U.S. oil supply revolution and the global economy

Kamiar Mohaddes and Mehdi Raissi

No 263, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper investigates the global macroeconomic consequences of falling oil prices due to the oil revolution in the United States, using a Global VAR model estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Set-identification of the U.S. oil supply shock is achieved through imposing dynamic sign restrictions on the impulse responses of the model. The results show that there are considerable heterogeneities in the responses of different countries to a U.S. supply-driven oil price shock, with real GDP increasing in both advanced and emerging market oil-importing economies, output declining in commodity exporters, inflation falling in most countries, and equity prices rising worldwide. Overall, our results suggest that following the U.S. oil revolution, with oil prices falling by 51 percent in the first year, global growth increases by 0.16 to 0.37 percentage points. This is mainly due to an increase in spending by oil importing countries, which exceeds the decline in expenditure by oil exporters.

JEL-codes: C32 E17 F44 F47 O13 Q43 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-01-01
New Economics Papers: this item is included in nep-ene and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The US oil supply revolution and the global economy (2019)
Working Paper: The U.S. Oil Supply Revolution and the Global Economy (2017)
Working Paper: The U.S. Oil Supply Revolution and the Global Economy (2016)
Working Paper: The US oil supply revolution and the global economy (2016)
Working Paper: The U.S. Oil Supply Revolution and the Global Economy (2016)
Working Paper: The U.S. Oil Supply Revolution and the Global Economy (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:263

DOI: 10.24149/gwp263

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