What is the impact of oil price changes on French growth?

M. Barlet and L. Crusson
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M. Barlet: Insee
L. Crusson: Insee

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: The two “oil shocks” of the 1970s reduced the GDP growth rate. Since that period, sudden oil price increases have been considered as a major source of economic slowdown. We estimate VAR models and Markov-Switching models to evaluate the impact of oil price increases on French growth. Our results indicate a breakdown in the relationship between oil prices and economic activity at the beginning of the 1980s. Over the period 1980-2006, our estimations show a slight negative effect of oil price increases only during low-growth phases. Our models also underlight a slowdown in the foreign demand following an oil price increase. The GDP growth rate is indirectly affected by this foreign demand decrease.

Keywords: Oil shocks; GDP growth rate; breakpoints; VAR models; Markov-Switching models (search for similar items in EconPapers)
JEL-codes: C32 E32 Q43 (search for similar items in EconPapers)
Date: 2007
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