IDEAS home Printed from https://ideas.repec.org/p/abn/wpaper/auwp2025-06.html
   My bibliography  Save this paper

How OPEC Oil Shocks Shape U.S. CPI Inflation: Evidence from an IV-SVAR Approach

Author

Listed:
  • Subash Bhandari
  • Hyeongwoo Kim

Abstract

This paper investigates the transmission of structural global oil market shocks to U.S. inflation using an instrumental variable structural vector autoregression (IV-SVAR) applied to highly disaggregated Consumer Price Index (CPI) components. We consider two types of shocks: oil supply shocks, arising from OPEC production disruptions, and oil supply news shocks, reflecting expectations of future production changes. The inflationary effects are concentrated in energy-related goods, significantly driving headline CPI, while non-necessity components exhibit muted or even negative responses. Moreover, news shocks generate short-lived, front-loaded effects, whereas supply shocks produce more persistent impacts.

Suggested Citation

  • Subash Bhandari & Hyeongwoo Kim, 2025. "How OPEC Oil Shocks Shape U.S. CPI Inflation: Evidence from an IV-SVAR Approach," Auburn Economics Working Paper Series auwp2025-06, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2025-06
    as

    Download full text from publisher

    File URL: https://cla.auburn.edu/econwp/Archives/2025/2025-06.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abn:wpaper:auwp2025-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hyeongwoo Kim (email available below). General contact details of provider: https://edirc.repec.org/data/deaubus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.