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Impact of Oil Price Volatility on State-Level Consumption of the United States: The Role of Oil Dependence

Author

Listed:
  • Renee van Eyden

    (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)

  • Xin Sheng

    (Lord Ashcroft International Business School, Anglia Ruskin University, Chelmsford, CM1 1SQ, UK)

  • Mark E. Wohar

    (College of Business Administration, University of Nebraska at Omaha, 6708 Pine Street, Omaha, NE 68182, USA)

Abstract

In this study we analyse the impact of oil price uncertainty (as measured by an observable measure of oil price volatility, i.e. realised volatility) on state-level consumption by accounting for oil dependency. We account for both the long- and short-run dynamics of the state-level consumption function using a panel data approach over the quarterly period of 1975:Q1 to 2012:Q2, and simultaneously estimate the short-run impact of oil price volatility at the state-level conditional upon their oil dependency. We find that the negative impact of volatility is most severe for the states of Wyoming, Alaska and New Mexico, while the negative impact of volatility is least for Illinois, New York and Nebraska.

Suggested Citation

  • Renee van Eyden & Rangan Gupta & Xin Sheng & Mark E. Wohar, 2019. "Impact of Oil Price Volatility on State-Level Consumption of the United States: The Role of Oil Dependence," Working Papers 201969, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201969
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    References listed on IDEAS

    as
    1. Albanesi, Stefania, 2007. "Inflation and inequality," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1088-1114, May.
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    7. Erosa, Andres & Ventura, Gustavo, 2002. "On inflation as a regressive consumption tax," Journal of Monetary Economics, Elsevier, vol. 49(4), pages 761-795, May.
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    Cited by:

    1. Bernd Hayo, 2023. "Does the ECB’s Monetary Policy Affect Personal Finances and Economic Inequality? A Household Perspective from Germany," MAGKS Papers on Economics 202023, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    Oil price volatility; oil dependency; U.S. state-level consumption;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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