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The shale oil boom and the U.S. economy: Spillovers and time-varying effects

Author

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  • Hilde C. Bjørnland
  • Julia Zhulanova

Abstract

We analyze if the transmission of oil price shocks on the U.S. economy has changed with the shale oil boom. To do so, we put forward a framework that allows for spillovers between industries and learning by doing (LBD) over time. We identify these spillovers using a time-varying parameter factor-augmented vector autoregressive (VAR) model with both state level and country level data. In contrast to previous results, we find considerable changes in the way oil price shocks are transmitted to the U.S economy: there are now positive spillovers to non-oil investment, employment and production from an increase in the oil price- effects that were not present before the shale oil boom.

Suggested Citation

  • Hilde C. Bjørnland & Julia Zhulanova, 2019. "The shale oil boom and the U.S. economy: Spillovers and time-varying effects," Working Paper 2019/14, Norges Bank.
    • Handle: RePEc:bno:worpap:2019_14
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    1. is not listed on IDEAS
    2. repec:bny:wpaper:0139 is not listed on IDEAS
    3. Zhu, Zixiang & Wen, Yake & Zhou, Weimin & Liu, Xintong, 2025. "The state-dependent effects of oil supply news shocks," Energy Economics, Elsevier, vol. 149(C).
    4. Rees, Daniel M., 2025. "Commodity prices and the US dollar," Journal of International Economics, Elsevier, vol. 157(C).
    5. Arezki,Rabah & Cho,Caleb Sungwoo & Ha Nguyen & Pham,Anh, 2022. "Corporate Debt and Stock Returns : Evidence from U.S. Firms during the 2020 Oil Crash," Policy Research Working Paper Series 10079, The World Bank.
    6. Ryan Hanson & Ana María Herrera, 2025. "The Effect of Oil News Shocks on Job Creation and Destruction," Working Papers 25-06, Center for Economic Studies, U.S. Census Bureau.
    7. Lutz Kilian & Xiaoqing Zhou, 2023. "The Econometrics of Oil Market VAR Models," Advances in Econometrics, in: Essays in Honor of Joon Y. Park: Econometric Methodology in Empirical Applications, volume 45, pages 65-95, Emerald Group Publishing Limited.
    8. Anaya Longaric, Pablo & Kostakis, Vasileios & Parisi, Laura & Vinci, Francesca, 2025. "Oil shocks and firm investment on the two sides of the Atlantic," Working Paper Series 3116, European Central Bank.
    9. Ehouman, Yao Axel, 2020. "Volatility transmission between oil prices and banks' stock prices as a new source of instability: Lessons from the United States experience," Economic Modelling, Elsevier, vol. 91(C), pages 198-217.
    10. Lin, Boqiang & Lan, Tianxu, 2025. "The transmission of coal price shock to Chinese industry: Sub-sectors and regions heterogeneity," Energy, Elsevier, vol. 316(C).
    11. Yao Axel Ehouman, 2020. "Volatility transmission between oil prices and banks’ stock prices as a new source of instability: Lessons from the United States experience," Post-Print hal-02960571, HAL.
    12. Dohyoung Kwon, 2024. "Changes in the effects of oil price shocks on US industrial production," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2515-2526, April.
    13. repec:bny:wpaper:0134 is not listed on IDEAS
    14. Potts, Todd B. & Yerger, David B., 2024. "The macroeconomic impact of energy price shocks: Threshold effects and the fracking boom," Resources Policy, Elsevier, vol. 90(C).

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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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