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How do consumers interpret the macroeconomic effects of oil price fluctuations? Evidence from U.S. survey data

Author

Listed:
  • Martin Geiger

    ()

  • Johann Scharler

    ()

Abstract

We use survey data to study how consumers assess the macroeconomic effects of structural oil market shocks on the U.S. economy using vector autoregressive models. To structurally decompose oil price changes, we impose sign restrictions on impulse responses. We find that the survey respondents' expectations are qualitatively in line with the actual developments in most cases. Nevertheless, survey respondents underestimate the adverse effects of oil market shocks in some cases. We also find that respondents expect the central bank to stabilize inflation as well as output and that expectations are consistent with a standard Taylor rule.

Suggested Citation

  • Martin Geiger & Johann Scharler, 2018. "How do consumers interpret the macroeconomic effects of oil price fluctuations? Evidence from U.S. survey data," Working Papers 2018-13, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2018-13
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    References listed on IDEAS

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    More about this item

    Keywords

    Macroeconomic Expectations; Michigan Survey; Structural Vector Autoregression; Zero and Sign Restrictions;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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