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Natural Gas and the US Economy: Some Preliminary Rules of Thumb

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  • Arora, Vipin

Abstract

I estimate the response of real US GDP to changes in the natural gas price. A 10% increase in the natural gas price due to an unexpected fall in supply leads to a 0.15% decrease in GDP when using data after 2005. I also find that price increases driven by export demand became a net positive for GDP between 2006 and 2017—an interesting result that requires further research. Finally, the response of GDP to an increase in natural gas production is small and positive since 2005.

Suggested Citation

  • Arora, Vipin, 2018. "Natural Gas and the US Economy: Some Preliminary Rules of Thumb," MPRA Paper 87279, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:87279
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    References listed on IDEAS

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    1. Arora, Vipin, 2014. "Estimates of the Price Elasticities of Natural Gas Supply and Demand in the United States," MPRA Paper 54232, University Library of Munich, Germany.
    2. Weber, Jeremy G., 2014. "A decade of natural gas development: The makings of a resource curse?," Resource and Energy Economics, Elsevier, vol. 37(C), pages 168-183.
    3. Kilian, Lutz & Lee, Thomas K., 2014. "Quantifying the speculative component in the real price of oil: The role of global oil inventories," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 71-87.
    4. Yassine Kirat, 2016. "The actual impact of shale gas revolution on the U.S.manufacturing sector," Working Papers 2016.19, FAERE - French Association of Environmental and Resource Economists.
    5. Vipin Arora and Jozef Lieskovsky, 2014. "Natural Gas and U.S. Economic Activity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    6. Arora Vipin, 2014. "Aggregate impacts of recent US natural gas trends," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 419-443, January.
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    Cited by:

    1. Geng, Jiang-Bo & Xu, Xiao-Yue & Ji, Qiang, 2020. "The time-frequency impacts of natural gas prices on US economic activity," Energy, Elsevier, vol. 205(C).

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    Keywords

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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • 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
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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