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Energy markets and the Midwest economy

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  • Richard H. Mattoon

Abstract

This article examines the effects of fuel prices on the Midwest economy. As a region that is still disproportionately reliant on manufacturing, the Midwest would be expected to feel the brunt of high energy costs. However, is this still the case, or has the impact been mitigated over time by the restructuring of the region’s economy? The author finds that the Midwest has followed the national pattern of decreasing reliance on energy to produce regional output, but still has a relatively high concentration of energy-intensive industries that, when combined with unfavorable weather conditions, suggests that the region is still sensitive to energy price spikes.

Suggested Citation

  • Richard H. Mattoon, 2005. "Energy markets and the Midwest economy," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 19-31.
  • Handle: RePEc:fip:fedhep:y:2005:i:qiv:p:19-31:n:v.29no.4
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    References listed on IDEAS

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    1. Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-751, September.
    2. Pindyck, Robert S, 1988. "Irreversible Investment, Capacity Choice, and the Value of the Firm," American Economic Review, American Economic Association, vol. 78(5), pages 969-985, December.
    3. 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.
    4. Robert H. Rasche & John A. Tatom, 1977. "The effects of the new energy regime on economic capacity, production, and prices," Review, Federal Reserve Bank of St. Louis, issue May, pages 2-12.
    5. Gregory K. Bell & José M. Campa, 1997. "Irreversible Investments And Volatile Markets: A Study Of The Chemical Processing Industry," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 79-87, February.
    6. 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.
    7. Richard J. Gilbert & Knut Anton Mork, 1986. "Efficient Pricing During Oil Supply Disruptions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 51-68.
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    Keywords

    Energy consumption;

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