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Oil Shocks through International Transport Costs: Evidence from U.S. Business Cycles

  • Hakan Yilmazkuday

    ()

    (Department of Economics, Florida International University)

The effects of oil shocks on output volatility through international transport costs are investigated in an open-economy DSGE model. Two versions of the model, with and without international transport costs, are structurally estimated for the U.S. economy by a Bayesian approach for moving windows of ten years. For model selection, the posterior odds ratios of the two versions are compared for each ten-year window. The version with international transport costs is selected during periods of high volatility in crude oil prices. The contribution of international transport costs to the volatility of U.S. GDP has been estimated as high as 36% during periods of oil crises.

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File URL: http://casgroup.fiu.edu/pages/docs/3501/1311369604_11-05.pdf
File Function: First version, 2011
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Paper provided by Florida International University, Department of Economics in its series Working Papers with number 1105.

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Length: 34 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:fiu:wpaper:1105
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