The Oil Story: Is it Still the Same?

Swati Singh () and Naveen Srinivasan
Additional contact information
Swati Singh: MSE

Working Papers from Madras School of Economics,Chennai,India

Abstract: It is not to be doubted that the oil price shocks adversely impact the economy. Enough literature is present in support of this fact but, at the same time, it is equivalently important to determine the changing nature of this relationship. This paper studies the changing behavior of this relation from 1948-2018 and shows that the oil prices are no more as effective in explaining the changes in the output of the economy as it had been before the 1970s. Our results also show the extent to which oil intensity has reduced in effecting the output of the US economy along with explaining the short term and long term impacts of oil shocks. Through variance decomposition analysis, the paper explains the reason for this decline in oil importance in recent time. Various factors like changing technology and political and strategic implications are found to be a few of the many reasons behind this change.

Keywords: Macroeconomic Fluctuations; Oil shocks; Energy and the Macroeconomy; ARDL Model; VAR; Granger causality test; Error Variance Decomposition (search for similar items in EconPapers)
JEL-codes: C22 C32 E32 Q43 (search for similar items in EconPapers)
Pages: 41` pages
Date: 2020-06
New Economics Papers: this item is included in nep-ene, nep-ets and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-197.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mad:wpaper:2020-197

Access Statistics for this paper

More papers in Working Papers from Madras School of Economics,Chennai,India Contact information at EDIRC.
Bibliographic data for series maintained by Geetha G ().