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Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market*

* This paper has been replicated

Author

Listed:
  • Lutz Kilian

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)

Suggested Citation

  • Lutz Kilian, 2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market," American Economic Review, American Economic Association, vol. 99(3), pages 1053-1069, June.
    • Handle: RePEc:aea:aecrev:v:99:y:2009:i:3:p:1053-69
    Note: DOI: 10.1257/aer.99.3.1053
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.99.3.1053
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    File URL: http://www.aeaweb.org/aer/data/june09/20070211_data.zip
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    Replication

    This item has been replicated by:
  • Kim, Gil & Vera, David, 2019. "Recent drivers of the real oil price: Revisiting and extending Kilian's (2009) findings," Energy Economics, Elsevier, vol. 82(C), pages 201-210.

    • More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market (AER 2009) in ReplicationWiki

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