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What is the impact of oil price changes on French growth?

Author

Listed:
  • M. BARLET

    (Insee)

  • L. CRUSSON

    (Insee)

Abstract

The two “oil shocks” of the 1970s reduced the GDP growth rate. Since that period, sudden oil price increases have been considered as a major source of economic slowdown. We estimate VAR models and Markov-Switching models to evaluate the impact of oil price increases on French growth. Our results indicate a breakdown in the relationship between oil prices and economic activity at the beginning of the 1980s. Over the period 1980-2006, our estimations show a slight negative effect of oil price increases only during low-growth phases. Our models also underlight a slowdown in the foreign demand following an oil price increase. The GDP growth rate is indirectly affected by this foreign demand decrease.

Suggested Citation

  • M. Barlet & L. Crusson, 2007. "What is the impact of oil price changes on French growth?," Documents de Travail de l'Insee - INSEE Working Papers g2007-04, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2007-04
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zr0j2/f1.pdf
    File Function: Document de travail de la DESE numéro G2007/04
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    More about this item

    Keywords

    Oil shocks; GDP growth rate; breakpoints; VAR models; Markov-Switching models;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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