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Oil price shocks and the U.S. economy: where does the asymmetry originate?

Nathan Balke (), Stephen Brown and Mine Yucel

No 9911, Working Papers from Federal Reserve Bank of Dallas

Abstract: Rising oil prices appear to retard aggregate U.S. economic activity by more than falling oil prices stimulate it. Past research suggests adjustment costs and/or monetary policy may be possible explanations ofthe asymmetric response. This paper uses a quasi-vector autoregressive model of U. S. economy to examine from where the asymmetry might originate. The analysis uses counterfactual impulse response experiments to detennine that monetary policy alone cannot account for the asymmetry. The robustness ofshort-lived asymmetry across the base case and counterfactuals is consistent with the adjustment-cost explanation.

JEL-codes: E32 Q43 (search for similar items in EconPapers)
Pages: 31 pages
Date: 1999
Note: Published as: Balke, Nathan S., Stephen P.A. Brown and Mine K. Yücel (2002), "Oil Price Shocks and the U.S. Economy: Where Does the Asymmetry Originate?," The Energy Journal 23 (3): 27-52.
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