Oil, Automobiles, and the U.S. Economy: How Much have Things Really Changed?
This paper studies the impact of oil shocks on the U.S. economy--and on the motor vehicle industry in particular--and re-examines whether the relationship has changed over time. We find remarkable stability in the response of aggregate real variables to oil shocks once we account for the extra costs imposed on the economy in the 1970s by price controls and a complex system of entitlements that led to some rationing and shortages. To investigate further why the response of real variables to oil shocks has not declined over time, we focus on the motor vehicle industry, which is considered the most important channel through which oil shocks affect the economy. We find that, contrary to common perceptions, the share of motor vehicles in total U.S. goods production has shown little decline over time. Moreover, within the motor vehicle industry, the effects of oil shocks on the mix of vehicle sold and on capacity utilization appear to have been proportional in recent decades to the effects observed in the 1970s.
|Date of creation:||Jun 2010|
|Date of revision:|
|Publication status:||published as Oil, Automobiles, and the U.S. Economy: How Much Have Things Really Changed? , Valerie A. Ramey, Daniel J. Vine. in NBER Macroeconomics Annual 2010, Volume 25 , Acemoglu and Woodford. 2011|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christopher R. Knittel, 2011.
"Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector,"
American Economic Review,
American Economic Association, vol. 101(7), pages 3368-99, December.
- Christopher R. Knittel, 2009. "Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector," NBER Working Papers 15162, National Bureau of Economic Research, Inc.
- Olivier J. Blanchard & Marianna Riggi, 2009.
"Why are the 2000s so different from the 1970s? A structural interpretation of changes in the macroeconomic effects of oil prices,"
NBER Working Papers
15467, National Bureau of Economic Research, Inc.
- Olivier J. Blanchard & Marianna Riggi, 2013. "WHY ARE THE 2000s SO DIFFERENT FROM THE 1970s? A STRUCTURAL INTERPRETATION OF CHANGES IN THE MACROECONOMIC EFFECTS OF OIL PRICES," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1032-1052, October.
- Lutz Kilian, 2010. "Explaining Fluctuations in Gasoline Prices: A Joint Model of the Global Crude Oil Market and the U.S. Retail Gasoline Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
- Knittel, Christopher R., 2009. "Automobiles on Steroids: Product Attribute Trade-Oï¿½s and Technological Progress in the Automobile Sector," Institute of Transportation Studies, Working Paper Series qt2nt1r1x1, Institute of Transportation Studies, UC Davis.
- Chao Wei, 2013.
"A Dynamic General Equilibrium Model of Driving, Gasoline Use and Vehicle Fuel Efficiency,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 650-667, October.
- Chao Wei, 2012. "Code and data files for "A Dynamic General Equilibrium Model of Driving, Gasoline Use and Vehicle Fuel Efficiency"," Computer Codes 11-284, Review of Economic Dynamics.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16067. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.