The Response of U.S. Investment to Oil Price Shocks: Does the Shale Boom Matter?

Melek, Nida Cakir

doi:10.18651/er/4q18cakirmelek

Cited by 2 publications

(3 citation statements)

References 17 publications

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“…That is, the US oil production, as well as investment related to innovations in shale oil recovery techniques, has dramatically expanded since 2005. Moreover, the split between the two subperiods broadly coincides with previous papers including Kang et al (2016) and Cakir Melek (2018).…”

Section: Datasupporting

confidence: 90%

“…For example, Baumeister and Kilian (2016) document the muted response of aggregate economic activity to the unprecedented decline in oil prices from 2014 to 2016 1 . Cakir Melek (2018) also finds that aggregate investment in the United States has become more positively responsive to oil price shocks since the shale oil boom. Moreover, Bjørnland and Zhulanova (2019) show the evident emergence of the positive spillover to non‐oil investment, employment, and production from an increase in oil prices.…”

Section: Introductionmentioning

confidence: 99%

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Changes in the effects of oil price shocks on US industrial production

Kwon

2023

Int. J Fin Econ

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This paper examines whether there exists a structural change in the relationship between oil shocks and US industrial production with the rapid development in oil industry due to the shale revolution. Using a structural VAR model, I identify supply and demand shocks in global crude oil markets and estimate changes in their effects on the US industrial production. The key finding is that the US industry output has become more responsive to oil price shocks since the shale oil boom. Oil supply shocks have been more important and heterogeneous effects on the industrial production depending on the US or non‐US oil supply component. There has also emerged the positive effect of oil demand shocks, stimulating aggregate economic activity. In particular, I find that there have been strong positive spillover effects from an oil price increase to other industries not only through direct purchases of inputs for oil production and investment, but also through indirect knowledge and technology transfers created during the shale revolution. These findings have profound policy implications for the fiscal and monetary authority who copes with exogenous oil shocks.

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Section: Datasupporting

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Changes in the effects of oil price shocks on US industrial production

Kwon

2023

Int. J Fin Econ

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“…Loria (2017) finds that, while a small oil price increase leads to a decline in U.S. nonresidential fixed investment, the effect of a large oil price increase is ambiguous. However, Çakır Melek et al (2017), Çakır Melek (2018, and Bjørnland and Zhulanova (2019) show that the response of U.S. investment to oil price shocks has changed following the shale boom in mid-2016. Specifically, they find that U.S. investment has become more responsive to demand shocks and less responsive to oil supply shocks.…”

Section: Introductionmentioning

confidence: 99%

The response of corporate investments in the US to oil price changes: the role of asymmetries

Maghyereh

Awartani²

2020

AFL

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This paper investigates the influence of oil on corporate investments in the US. The inference is taken from a large sample which contains data on 15,411 companies over the period that extended from 1984 to 2017. It adds to the literature by showing that non-oil corporate investments in the US respond asymmetrically to oil price changes. In particular, when the oil price increases, the capital spending of companies suffers by more than it benefits from the declines in the price of oil. These results are important in assessing the impact of energy price fluctuations on the long-term investment decisions of US companies.

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The Response of U.S. Investment to Oil Price Shocks: Does the Shale Boom Matter?

Cited by 2 publications

References 17 publications

Changes in the effects of oil price shocks on US industrial production

Changes in the effects of oil price shocks on US industrial production

The response of corporate investments in the US to oil price changes: the role of asymmetries

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