Affiliation:
1. Department of Economics, University of Michigan, 611 Tappan Street, Ann Arbor, MI 48109-1220, and Centre for Economic Policy Research.
Abstract
Shocks to the real price of oil may reflect oil supply shocks, shocks to the global demand for all industrial commodities, or demand shocks that are specific to the crude oil market. Each shock has different effects on the real price of oil and on US macroeconomic aggregates. Changes in the composition of shocks help explain why regressions of macroeconomic aggregates on oil prices tend to be unstable. Evidence that the recent surge in oil prices was driven primarily by global demand shocks helps explain why this shock so far has failed to cause a major recession in the United States. (JEL E31, E32, Q41, Q43)
Publisher
American Economic Association
Subject
Economics and Econometrics
Cited by
2888 articles.
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