How Does the Oil Price Shock Affect Consumers?

Liping(Sophia) Gao, Hyeongwoo Kim () and Richard Saba ()

No auwp2013-04, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: Edelstein and Kilian (2009) point out that the oil price shock involves a reduction in consumer spending, which results in a decrease in the demand for goods and services. This paper empirically evaluates this argument by empirically investigating effects of the oil price shock on six CPI sub-indices in the US. We find substantial decreases in the relative price in less energy-intensive sectors, but not in energy-intensive sectors. Our findings are consistent with those of Edelstein and Kilian (2009) in the sense that spending adjustments play an important role in price dynamics.

Keywords: Oil Price Shocks; Pass-Through Effect; Consumer Price Sub-Index; Consumption Expenditures; Income Effect (search for similar items in EconPapers)
JEL-codes: E21 E31 Q43 (search for similar items in EconPapers)
Date: 2013-03
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 (21)

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Related works:
Working Paper: How Does the Oil Price Shock Affect Consumers? (2014)
Working Paper: How Does the Oil Price Shock Affect Consumers? (2013)
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