The Macroeconomic Effects of Oil Supply News: Evidence from OPEC Announcements

Diego Känzig

American Economic Review, 2021, vol. 111, issue 4, 1092-1125

Abstract: This paper studies how changes in oil supply expectations affect the oil price and the macroeconomy. Using a novel identification design, exploiting institutional features of OPEC and high-frequency data, I identify an oil supply news shock. These shocks have statistically and economically significant effects. Negative news leads to an immediate increase in oil prices, a gradual fall in oil production, and an increase in inventories. This has consequences for the US economy: activity falls, prices and inflation expectations rise, and the dollar depreciates, providing evidence for a strong channel operating through supply expectations.

JEL-codes: E31 E32 F31 Q35 Q38 Q43 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (98)

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Working Paper: The macroeconomic effects of oil supply news: Evidence from OPEC announcements (2020)
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DOI: 10.1257/aer.20190964

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