Time-Varying Effects of Oil Supply Shocks on the US Economy

Gert Peersman () and Christiane Baumeister

No 171, 2009 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate how the dynamic effects of oil supply shocks on the US economy have changed over time. We first document a remarkable structural change in the oil market itself, i.e. a considerably steeper, hence, less elastic oil demand curve since the mid-eighties. Accordingly, a typical oil supply shock is currently characterized by a much smaller impact on world oil production and a greater effect on the real price of crude oil, but has a similar impact on US output and inflation as in the 1970s. Second, we find a smaller role for oil supply shocks in accounting for real oil price variability over time, implying that current oil price fluctuations are more demand driven. Finally, while unfavorable oil supply disturbances explain little of the "Great Inflation", they seem to have contributed to the 1974/75, early 1980s and 1990s recessions but also dampened the economic boom at the end of the millennium.

Date: 2009
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Citations: View citations in EconPapers (30)

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Related works:
Journal Article: Time-Varying Effects of Oil Supply Shocks on the US Economy (2013)
Working Paper: Time-Varying Effects of Oil Supply Shocks on the U.S. Economy (2012)
Working Paper: Time-Varying Effects of Oil Supply Shocks on the US Economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed009:171

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