How Does the Oil Price Shock Affect Consumers?
AbstractEdelstein and Kilian (2009) point out that the oil price shock involves a reduction in consumer spending, which results in a decrease in the demand for goods and services. This paper empirically evaluates this argument by empirically investigating effects of the oil price shock on six CPI sub-indices in the US. We find substantial decreases in the relative price in less energy-intensive sectors, but not in energy-intensive sectors. Our findings are consistent with those of Edelstein and Kilian (2009) in the sense that spending adjustments play an important role in price dynamics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2013-04.
Date of creation: Mar 2013
Date of revision:
Contact details of provider:
Postal: 0326 Haley Center, Auburn University, AL 36849-5049
Phone: (334) 844-4910
Fax: (334) 844-4615
Web page: http://cla.auburn.edu/economics/
More information through EDIRC
Oil Price Shocks; Pass-Through Effect; Consumer Price Sub-Index; Consumption Expenditures; Income Effect;
Other versions of this item:
- Gao, Liping & Kim, Hyeongwoo & Saba, Richard, 2013. "How Does the Oil Price Shock Affect Consumers?," MPRA Paper 49565, University Library of Munich, Germany.
- Liping Gao & Hyeongwoo Kim & Richard Saba, 2014. "How Does the Oil Price Shock Affect Consumers?," Auburn Economics Working Paper Series auwp2014-10, Department of Economics, Auburn University.
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-ENE-2013-03-23 (Energy Economics)
- NEP-MAC-2013-03-23 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kilian, Lutz & Lewis, Logan, 2009.
"Does the Fed Respond to Oil Price Shocks?,"
CEPR Discussion Papers
7594, C.E.P.R. Discussion Papers.
- Robert B. Barsky & Lutz Kilian, 2004.
"Oil and the Macroeconomy Since the 1970s,"
Journal of Economic Perspectives,
American Economic Association, vol. 18(4), pages 115-134, Fall.
- Cologni, Alessandro & Manera, Matteo, 2008.
"Oil prices, inflation and interest rates in a structural cointegrated VAR model for the G-7 countries,"
Elsevier, vol. 30(3), pages 856-888, May.
- Matteo Manera & Alessandro Cologni, 2005. "Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries," Working Papers 2005.101, Fondazione Eni Enrico Mattei.
- Pesaran, H. Hashem & Shin, Yongcheol, 1998.
"Generalized impulse response analysis in linear multivariate models,"
Elsevier, vol. 58(1), pages 17-29, January.
- Pesaran, M. H. & Shin, Y., 1997. "Generalised Impulse Response Analysis in Linear Multivariate Models," Cambridge Working Papers in Economics 9710, Faculty of Economics, University of Cambridge.
- Korhonen, Iikka & Ledyaeva, Svetlana, 2008.
"Trade linkages and macroeconomic effects of the price of oil,"
BOFIT Discussion Papers
16/2008, Bank of Finland, Institute for Economies in Transition.
- Korhonen, Iikka & Ledyaeva, Svetlana, 2010. "Trade linkages and macroeconomic effects of the price of oil," Energy Economics, Elsevier, vol. 32(4), pages 848-856, July.
- Peter Ferderer, J., 1996. "Oil price volatility and the macroeconomy," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 1-26.
- Hyeongwoo, Kim, 2009.
"Generalized Impulse Response Analysis: General or Extreme?,"
17014, University Library of Munich, Germany.
- Hyeongwoo Kim, 2012. "Generalized Impulse Response Analysis: General or Extreme?," Auburn Economics Working Paper Series auwp2012-04, Department of Economics, Auburn University.
- Gisser, Micha & Goodwin, Thomas H, 1986. "Crude Oil and the Macroeconomy: Tests of Some Popular Notions: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 95-103, February.
- Zhang, Dayong, 2008. "Oil shock and economic growth in Japan: A nonlinear approach," Energy Economics, Elsevier, vol. 30(5), pages 2374-2390, September.
- Koop, Gary & Pesaran, M. Hashem & Potter, Simon M., 1996. "Impulse response analysis in nonlinear multivariate models," Journal of Econometrics, Elsevier, vol. 74(1), pages 119-147, September.
- Darby, Michael R, 1982.
"The Price of Oil and World Inflation and Recession,"
American Economic Review,
American Economic Association, vol. 72(4), pages 738-51, September.
- Michael R. Darby, 1981. "The Price of Oil and World Inflation and Recession," UCLA Economics Working Papers 228, UCLA Department of Economics.
- Edelstein, Paul & Kilian, Lutz, 2009. "How sensitive are consumer expenditures to retail energy prices?," Journal of Monetary Economics, Elsevier, vol. 56(6), pages 766-779, September.
- Hamilton, James D., 1996. "This is what happened to the oil price-macroeconomy relationship," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 215-220, October.
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hyeongwoo Kim).
If references are entirely missing, you can add them using this form.