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Crude Oil Prices and U.S. Economic Performance: Where Does the Asymmetry Reside?

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  • Hillard G. Huntington

Abstract

Sustained decreases in crude oil prices appear to affect the U.S. economy differently than sustained increases. This paper shows that a significant part of the observed asymmetry is due to adjustments within the energy sector and not within the rest of the economy. In particular, sustained decreases in petroleum product or general energy prices do not appear to have qualitatively different macroeconomic impacts than do sustained price increases. The singular focus on crude oil price changes in previous studies is misplaced. Moreover, the 1986 oil price collapse did not operate in isolation from other important events. As crude oil prices fell in the 1986 period, other factors caused a major devaluation of the U.S. dollar that had potentially important effects on the U.S. economy.

Suggested Citation

  • Hillard G. Huntington, 1998. "Crude Oil Prices and U.S. Economic Performance: Where Does the Asymmetry Reside?," The Energy Journal, , vol. 19(4), pages 107-132, October.
    • Handle: RePEc:sae:enejou:v:19:y:1998:i:4:p:107-132
    DOI: 10.5547/ISSN0195-6574-EJ-Vol19-No4-5
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    References listed on IDEAS

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    2. Javier F. Mory, 1993. "Oil Prices and Economic Activity: Is the Relationship Symmetric?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 151-162.
    3. Knut Anton Mork & Oystein Olsen & Hans Terje Mysen, 1994. "Macroeconomic Responses to Oil Price Increases and Decreases in Seven OECD Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 19-36.
    4. Hooker, Mark A., 1996. "What happened to the oil price-macroeconomy relationship?," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 195-213, October.
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    More about this item

    Keywords

    Oil prices; asymmetry; US economy; price shock; oil supply shocks;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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