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Crude Oil Prices and U.S. Economic Performance: Where Does the Asymmetry Reside?

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  • Hillard G. Huntington
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    Abstract

    Sustained decreases in crude oil prices appear to affect the U.S. economy differently than sustained increases. This paper shows that a significant part of the observed asymmetry is due to adjustments within the energy sector and not within the rest of the economy. In particular, sustained decreases in petroleum product or general energy prices do not appear to have qualitatively different macroeconomic impacts than do sustained price increases. The singular focus on crude oil price changes in previous studies is misplaced. Moreover, the 1986 oil price collapse did not operate in isolation from other important events. As crude oil prices fell in the 1986 period, other factors caused a major devaluation of the U.S. dollar that had potentially important effects on the U.S. economy.

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    Bibliographic Info

    Article provided by International Association for Energy Economics in its journal The Energy Journal.

    Volume (Year): Volume19 (1998)
    Issue (Month): Number 4 ()
    Pages: 107-132

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    Handle: RePEc:aen:journl:1998v19-04-a05

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    Cited by:
    1. Giorgio Vicini & Francesco Gracceva & Anil Markandya & Valeria Costantini, 2005. "Security of Energy Supply: Comparing Scenarios From a European Perspective," Working Papers 2005.89, Fondazione Eni Enrico Mattei.
    2. Guillaume L`oeillet & Julien Licheron, 2009. "The role of oil prices in monetary policy rules: evidence from 4 major central banks," Economics Bulletin, AccessEcon, vol. 29(3), pages 2361-2371.
    3. Vo, Minh, 2011. "Oil and stock market volatility: A multivariate stochastic volatility perspective," Energy Economics, Elsevier, vol. 33(5), pages 956-965, September.
    4. Juncal Cuñado & Fernando Pérez de Gracia, . "Do Oil Price Shocks Matter? Evidence For Some Europesan Countries," Working Papers on International Economics and Finance 01-02, FEDEA.
    5. Cunado, J. & Perez de Gracia, F., 2005. "Oil prices, economic activity and inflation: evidence for some Asian countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(1), pages 65-83, February.
    6. Weston, J. Fred & Johnson, Brian A. & Siu, Juan A., 1999. "Mergers and restructuring in the world oil industry," Journal of Energy Finance & Development, Elsevier, vol. 4(2), pages 149-183.
    7. Ali Ahmed, Huson Joher & Wadud, I.K.M. Mokhtarul, 2011. "Role of oil price shocks on macroeconomic activities: An SVAR approach to the Malaysian economy and monetary responses," Energy Policy, Elsevier, vol. 39(12), pages 8062-8069.
    8. Ediger, Volkan S. & Berk, Istemi, 2011. "Crude oil import policy of Turkey: Historical analysis of determinants and implications since 1968," Energy Policy, Elsevier, vol. 39(4), pages 2132-2142, April.
    9. Brown, Stephen P. A. & Yucel, Mine K., 2002. "Energy prices and aggregate economic activity: an interpretative survey," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 193-208.
    10. Awerbuch, Shimon & Sauter, Raphael, 2006. "Exploiting the oil-GDP effect to support renewables deployment," Energy Policy, Elsevier, vol. 34(17), pages 2805-2819, November.
    11. Valeria Costantini & Francesco Gracceva, 2004. "Social Costs of Energy Disruptions," Working Papers 2004.116, Fondazione Eni Enrico Mattei.
    12. Surender Kumar, 2009. "The Macroeconomic Effects of Oil Price Shocks: Empirical Evidence for India," Economics Bulletin, AccessEcon, vol. 29(1), pages 15-37.
    13. Berk, Istemi & Aydogan, Berna, 2012. "Crude Oil Price Shocks and Stock Returns: Evidence from Turkish Stock Market under Global Liquidity Conditions," EWI Working Papers 2012-15, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
    14. Ýstemi Berk & Ý. Hakan Yetkiner, 2013. "Energy Prices and Economic Growth: Theory and Evidence in the Long Run," Working Papers 1303, Izmir University of Economics.
    15. Yang, C. W. & Hwang, M. J. & Huang, B. N., 2002. "An analysis of factors affecting price volatility of the US oil market," Energy Economics, Elsevier, vol. 24(2), pages 107-119, March.
    16. Jammazi, Rania & Aloui, Chaker, 2010. "Wavelet decomposition and regime shifts: Assessing the effects of crude oil shocks on stock market returns," Energy Policy, Elsevier, vol. 38(3), pages 1415-1435, March.
    17. Kang, Sang Hoon & Kang, Sang-Mok & Yoon, Seong-Min, 2009. "Forecasting volatility of crude oil markets," Energy Economics, Elsevier, vol. 31(1), pages 119-125, January.

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