Recent developments in U.S. energy markets: a background note
In its October 1999 World Economic Outlook, the IMF assumed that oil prices would be $18 per barrel in 2000. In reality, oil prices will probably average closer to $30 than to $20 a barrel this year. As oil prices have continued to rise above expectation, analysts have scrambled to find explanations. This note outlines some of the developments that have led to persistently high oil prices over the past two years. The author compares the current situation with that prevailing at the time of previous oil shocks and outlines some of the difficulties entailed in measuring the impact of sharp oil price increases on U.S. inflation and output. ; The author concludes that increased energy efficiency, robust economic conditions, enhanced central bank credibility, and stable inflation expectations both here and abroad are likely to make the impact of recent energy price increases on the U.S. economy more muted and manageable than in previous oil shocks. Indeed, she writes, the current episode suggests that one of the rewards for establishing a low-inflation environment may be an improved ability to weather moderate supply shocks. Still, she points out, it's not too soon to hope for an early spring.
Volume (Year): (2000)
Issue (Month): Sep ()
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97-25, C.V. Starr Center for Applied Economics, New York University.
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- Edward M. Gramlich, 1979. "Macro Policy Responses to Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 125-166.
- Mork, Knut Anton, 1989. "Oil and Macroeconomy When Prices Go Up and Down: An Extension of Hamilton's Results," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 740-744, June.
- Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
- Julio J. Rotemberg & Michael Woodford, 1996.
"Imperfect Competition and the Effects of Energy Price Increases on Economic Activity,"
NBER Working Papers
5634, National Bureau of Economic Research, Inc.
- Rotemberg, Julio J & Woodford, Michael, 1996. "Imperfect Competition and the Effects of Energy Price Increases on Economic Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 550-577, November.
- Philip K. Verleger, 2000. "Third Oil Shock: Real or Imaginary? Consequences and Policy Alternatives," Policy Briefs PB00-4, Peterson Institute for International Economics.
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