The Historical “Roots” of U.S. Energy Price Shocks

Huntington, Hillard G.

doi:10.5547/01956574.38.5.hhun

Cited by 6 publications

(1 citation statement)

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“…The effects of oil price shocks on the macroeconomy have attracted much attention. Many oil-importing countries see a correlation between increases in oil prices and subsequent economic downturns (e.g., Hamilton, 1983;Jeske, 2008, 2010;Gronwald, 2012;Abhyankar et al, 2013;Morana, 2014;Huntington, 2017;Guesmi et al, 2018). However, some recent studies reveal these effects have changed with time (Lescaroux, 2011).…”

Section: Introductionmentioning

confidence: 99%

Why the Effects of Oil Price Shocks on China’s Economy are Changing

Wang¹,

Zhang²,

Zhao³

2020

The Energy Journal

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Some studies on developed economies have revealed that the impacts of oil price shocks have decreased while conclusions about China remain occluded. We investigate the changing effects of oil price shocks on China's macroeconomy and discuss the causes. A time-varying parameter vector autoregressive (VAR) model reveals that impacts of oil price shocks on China's economy have shown a downward trend since 1997. The responses of the real output are much greater and last longer than those of inflation. Then a new Keynesian dynamic stochastic general equilibrium model is developed to synthetically explore the causes. The results indicate that decreasing oil intensity and monopoly power reduce the effects of oil price shocks, while increasing capital intensity in production amplifies them. Other factors-such as changing price stickiness, deregulation of refined oil prices, and shifts in monetary policy targets-have limited effects on the relationship between oil price shocks and China's macroeconomy.

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