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Oil Price Shocks and the U.S. Economy: Where Does the Asymmetry Originate?

Author

Listed:
  • Nathan S. Balke
  • Stephen P.A. Brown
  • Mine K. Yücel

Abstract

Rising oil prices appear to retard aggregate U.S. economic activity by more than falling oil prices stimulate it. Past research suggests adjustment costs, financial stress, and/or monetary policy may be possible explanations for the asymmetric response. This paper uses a near vector autoregressive model of the U. S. economy to examine where the asymmetry might originate. The analysis uses counterfactual experiments to determine that monetary policy alone cannot account for the asymmetry.

Suggested Citation

  • Nathan S. Balke & Stephen P.A. Brown & Mine K. Yücel, 2002. "Oil Price Shocks and the U.S. Economy: Where Does the Asymmetry Originate?," The Energy Journal, , vol. 23(3), pages 27-52, July.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:3:p:27-52
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No3-2
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    References listed on IDEAS

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    1. Peter Ferderer, J., 1996. "Oil price volatility and the macroeconomy," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 1-26.
    2. Knut Anton Mork, 1994. "Business Cycles and the Oil Market," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 15-38.
    3. 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.
    4. Davis, Steven J. & Haltiwanger, John, 2001. "Sectoral job creation and destruction responses to oil price changes," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 465-512, December.
    5. Hooker, Mark A., 1996. "What happened to the oil price-macroeconomy relationship?," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 195-213, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Oil prices shocks; asymmetry; US economy; GDP; monetary policy;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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