Natural Gas and U.S. Economic Activity

Vipin Arora () and Jozef Lieskovsky

MPRA Paper from University Library of Munich, Germany

Abstract: Previous empirical work has shown that real natural gas prices have a small to negligible impact on total U.S. industrial production and most of its sub-indices. We first show that these results still hold with a sample that runs through mid-2012 and uses a different natural gas price. Concerns about the joint determination of the real natural gas price and U.S. economic activity lead us to reassess these results using a multivariate framework. Our model shows that natural gas does affect U.S. economic activity, but primarily through changes in natural gas production. We also show that natural gas supply, inventory demand, and responses to events in the oil market have been the most important contributors to the real natural gas price since 2000. In terms of approximate point estimates, our results indicate that increases in natural gas supply can raise total U.S. industrial production by 0.1 to 0.5 percent under plausible scenarios.

Keywords: Natural gas; VAR; Granger causality; endogenous; industrial production (search for similar items in EconPapers)
JEL-codes: E37 F47 Q43 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://mpra.ub.uni-muenchen.de/42659/1/MPRA_paper_42659.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/50197/8/MPRA_paper_50197.pdf revised version (application/pdf)

Related works:
Journal Article: Natural Gas and U.S. Economic Activity (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42659

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