Why the nature of oil shocks matters
AbstractThis article studies the impact of oil shocks on the macroeconomy in two ways insofar unexploited in the literature. The analysis is conducted at the global level, and it explicitly accounts for the potentially changing nature of oil shocks. Based on an original world GDP series and a grouping of oil shocks according to their nature, we find that oil supply shocks negatively impact world growth, contrary to oil demand shocks, procyclical in their nature. This result is robust at the national level for the US. Furthermore, endogenous monetary policy is shown to have no countercyclical effects in the context of an oil demand shock.
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Bibliographic InfoPaper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-02.
Date of creation: 2009
Date of revision:
Oil shocks; Oil demand shocks; Oil supply shocks; Causality;
Other versions of this item:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- 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-2009-09-26 (All new papers)
- NEP-ENE-2009-09-26 (Energy Economics)
- NEP-FDG-2009-09-26 (Financial Development & Growth)
- NEP-MAC-2009-09-26 (Macroeconomics)
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