Structural Change And The Macroeconomic Effects Of Oil Shocks
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Structural Change And The Macroeconomic Effects Of Oil Shocks
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Author : Michael M. Hutchison
language : en
Publisher:
Release Date : 1992
Structural Change And The Macroeconomic Effects Of Oil Shocks written by Michael M. Hutchison and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Petroleum products categories.
International Dimensions Of Monetary Policy
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Author : Jordi Galí
language : en
Publisher: University of Chicago Press
Release Date : 2010-03-15
International Dimensions Of Monetary Policy written by Jordi Galí and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-03-15 with Business & Economics categories.
United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.
Why Are The 2000s So Different From The 1970s A Structural Interpretation Of Changes In The Macroeconomic Effects Of Oil Prices
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Author : Olivier Jean Blanchard
language : en
Publisher:
Release Date : 2009
Why Are The 2000s So Different From The 1970s A Structural Interpretation Of Changes In The Macroeconomic Effects Of Oil Prices written by Olivier Jean Blanchard and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Industrial productivity categories.
In the 1970s, large increases in the price of oil were associated with sharp decreases in output and large increases in inflation. In the 2000s, and at least until the end of 2007, even larger increases in the price of oil were associated with much milder movements in output and inflation. Using a structural VAR approach Blanchard and Gali (2007a) argued that this has reflected in large part a change in the causal relation from the price of oil to output and inflation. In order to shed light on the possible factors behind the decrease in the macroeconomic effects of oil price shocks, we develop a new-Keynesian model, with imported oil used both in production and consumption, and we use a minimum distance estimator that minimizes, over the set of structural parameters and for each of the two samples (pre and post 1984), the distance between the empirical SVAR-based impulse response functions and those implied by the model. Our results point to two relevant changes in the structure of the economy, which have modified the transmission mechanism of the oil shock: vanishing wage indexation and an improvement in the credibility of monetary policy. The relative importance of these two structural changes depends however on how we formalize the process of expectations formation by economic agents. Keywords: oil, real wage rigidity, new Keynesian, credibility. JEL Classifications: E3, E52.
Macroeconomic Effects Of Monetary Policy And Oil Price Changes
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Author : Young Koo Lee
language : en
Publisher:
Release Date : 1996
Macroeconomic Effects Of Monetary Policy And Oil Price Changes written by Young Koo Lee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with Macroeconomics categories.
This paper examines the relative importance between supply shocks and demand shocks. Examining the F-tests and variance decompositions of several candidate proxies, the federal funds rate and oil shocks dates are chosen as a proxy for monetary policy and oil price changes, respectively. Oil shocks dates variable has a stronger predictive power on real GNP growth than normalized oil shocks or normalized real oil price movements. The Federal funds rate has a stronger predictive power on real GNP growth than three-month Treasury bill rate or Romers dates. Results obtained from the reduced-form benchmark VAR system reveal that oil shocks account for 15-19 percent while the Federal funds rate accounts for 3-9 percent of the variance of the eight quarters ahead forecast errors of real GNP growth, for the sample period 1957:4-1995:2. The predictive power of oil shocks dates on real GNP growth is around twice larger than that of the Federal funds rate. Results of the structural benchmark VAR system, however, show that oil shocks account for 69.4 percent while the Federal funds rate accounts for 1.7 percent of the variance of the eight quarters ahead forecast errors of real GNP growth, for the sample period 1957:4-1995:2. Examining the structural VAR systems shows that the dynamic effects of labor or productivity shocks on outputs are roughly consistent with the Keynesian model in that increases in productivity or labor supply increase both output and unemployment in the short-run while Blanchard's (1989) results that a favorable supply shock brings the temporary decrease in output in the quarter. In conclusion, both oil (supply) shocks and monetary policy (demand) shocks have somewhat affected on the United States postwar economy. However, oil price shocks have affected business cycle fluctuations at least about twice more strongly than policy shocks. Moreover, the results obtained from the benchmark structural VAR show that oil price shocks have a very strong effect while monetary policy shocks have a negligible effect on real GNP growth after two quarters.
Macroeconomic Impacts Of Energy Shocks
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Author : H.G. Huntington
language : en
Publisher: Elsevier
Release Date : 2016-10-19
Macroeconomic Impacts Of Energy Shocks written by H.G. Huntington and has been published by Elsevier this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-10-19 with Business & Economics categories.
Large-scale macroeconomic models have been used extensively to analyze a wide range of important economic issues. They were originally developed to study the economy's response to monetary and fiscal policies. During the 1970s these models were expanded and revised to track the inflationary processes and to incorporate key energy variables so that they could be used to examine the impacts of energy price shocks.This study compares the responses of 14 prominent macroeconomic models to supply-side shocks in the form of sudden energy price increases or decreases and to policies for lessening the impacts of price jumps. Four energy price shocks were examined: oil price increases of 50 and 20 percent, an oil price reduction of 20 percent, and an 80 percent increase in domestic natural gas prices. Five policy responses were considered for offsetting the GNP impacts of the larger oil price increase: monetary accommodation, an income tax rate reduction, an increase in the investment tax credit for equipment, a reduction in the employer's payroll tax rate, and an oil stockpile release.The study was conducted by a working group comprised of about 40 modelers and potential model users from universities, business, and government. As in previous EMF studies, the group pursued two broad goals. Firstly, they sought to understand the models themselves by identifying important similarities as well as structural differences. Secondly, they sought to use the models to sharpen their understanding of energy shocks and of the related policy issues. Their conclusions appear as the first chapter in this volume, the remaining chapters providing more technical treatment of the key structural differences among the participating models as well as their use for evaluating energy policies.This volume is addressed particularly to those interested in the energy shock issue, as well as to those with a broader interest in macroeconomic models and policies.
Macroeconomic Effects Of Reforms On Three Diverse Oil Exporters Russia Saudi Arabia And The Uk
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Author : Samya Beidas-Strom
language : en
Publisher: International Monetary Fund
Release Date : 2019-10-11
Macroeconomic Effects Of Reforms On Three Diverse Oil Exporters Russia Saudi Arabia And The Uk written by Samya Beidas-Strom and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-11 with Business & Economics categories.
We build and estimate open economy two-bloc DSGE models to study the transmission and impact of shocks in Russia, Saudi Arabia and the United Kingdom. After accounting for country-specific fiscal and monetary sectors, we estimate their key policy and structural parameters. Our findings suggest that not only has output responded differently to shocks due to differing levels of diversification and structural and policy settings, but also the responses to fiscal consolidation differ: Russia would benefit from a smaller state foot-print, while in Saudi Arabia, unless this is accompanied by structural reforms that remove rigidities, output would fall. We also find that lower oil prices need not be bad news given more oil-intensive production structures. However, lower oil prices have hurt these oil producers as their public finances depend heavily on oil, among other factors. Productivity gains accompanied by ambitious structural reforms, along with fiscal and monetary reforms could support these economies to achieve better outcomes when oil prices fall, including via diversifying exports.
Essays On The Macroeconomic Effects Of Oil Price Shocks On The U S Economy
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Author : Romita Mukherjee
language : en
Publisher:
Release Date : 2011
Essays On The Macroeconomic Effects Of Oil Price Shocks On The U S Economy written by Romita Mukherjee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
A large volume of research has acknowledged the role of oil price shocks to generate a significant stagflationary impact on U.S. and other oil importing nations. Recent research however shows a paradigm shift in this oil price-macroeconomy relationship since the mid 1980s, during which the U.S. economy has been relatively resilient to oil shocks. Both output contraction and inflationary expectations have been milder in the post mid 1980s than before. But the 2007-08 oil shock episode has re-emphasized the immense impact of the ebbs and flows of oil prices on the U.S. economys ups and downs. Global oil price peaked at $148 a barrel in June 2008. With the mortgage crisis and credit crunch, oil was another blow too many. The U.S. economy swamped into one of the greatest recessions of all times. According to Hamilton (2009), the 2007-08 oil shock had a significant contribution to the recent recession. While a lot of work have been done on the effects of oil price shocks on the U.S. economy, relatively little work has investigated what triggers oil price increase. My research illustrates why it is important to study the cause of an oil price rise. First, the effects of oil price rise on the macro variables depend heavily on what causes the shock. Secondly, whereas the oil price hikes of the 1970s and early 1980s can mostly be attributed to exogenous events in OPEC (Arab Oil Embargo, Iran-Iraq War, Iranian Revolution), a significant source of oil price spikes in the post mid 1980 era have been an increase in global oil demand confronting stagnating oil production. From a policy perspective, of course, policies aimed at dealing with higher oil prices must take careful account of what causes oil prices to rise. Empirical research that demonstrates the resilience of U.S. economy to oil price shocks builds on the implicit assumption that as oil price varies, everything else in the global economy is held constant. Thus all variations in oil prices are taken as alike and exogenous. This overlooks the possibility that oil price rise sparked off by diverse events can potentially lead to different repercussions. This thesis is an attempt to develop framework to study the endogenous increase in oil price. The oil price increase arises from increase in U.S. growth rate, increase in foreign growth rate and a purely exogenous oil supply shock by OPEC. The most important result is that the source of oil price rise has changed after the mid 1980s - whereas before the mid 1980s, bulk of the variation in oil price was due to supply shocks by OPEC, post mid 1980s, most of the variation in oil price is explained by increase in U.S. and foreign growth. Furthermore, if the origin of the oil price rise is the same, then the responses of most U.S. macroeconomic variables display remarkable similarity in the pre and post mid 1980s. This result gives us a new way to look at the resilience of the U.S. economic activity to oil price rise since the mid 1980s. The resilience can be explained to a significant extent by the fact that the type of shocks resulting in oil price rise has changed.
The Differential Effects Of Oil Demand And Supply Shocks On The Global Economy
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Author : Mr.Paul Cashin
language : en
Publisher: International Monetary Fund
Release Date : 2012-10-23
The Differential Effects Of Oil Demand And Supply Shocks On The Global Economy written by Mr.Paul Cashin and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-10-23 with Business & Economics categories.
We employ a set of sign restrictions on the generalized impulse responses of a Global VAR model, estimated for 38 countries/regions over the period 1979Q2–2011Q2, to discriminate between supply-driven and demand-driven oil-price shocks and to study the time profile of their macroeconomic effects for different countries. The results indicate that the economic consequences of a supply-driven oil-price shock are very different from those of an oil-demand shock driven by global economic activity, and vary for oil-importing countries compared to energy exporters. While oil importers typically face a long-lived fall in economic activity in response to a supply-driven surge in oil prices, the impact is positive for energy-exporting countries that possess large proven oil/gas reserves. However, in response to an oil-demand disturbance, almost all countries in our sample experience long-run inflationary pressures and a short-run increase in real output.
Macroeconomic Effects Of Terms Of Trade Shocks
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Author : Nikola Spatafora
language : en
Publisher: World Bank Publications
Release Date : 1999
Macroeconomic Effects Of Terms Of Trade Shocks written by Nikola Spatafora and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
January 1995 The authors investigate the impact on economic growth and development of long-run movements in the external terms of trade, with special reference to the experience of 18 oil-exporting countries between 1973 and 1989. They argue that this sample approximates a controlled experiment for examining the impact of unanticipated -- but permanent -- shocks to the terms of trade. They analyze the sample econometrically using panel data techniques. They find that permanent terms-of-trade shocks have a strongly significant positive effect on investment, which they justify theoretically on the grounds that countries in the sample import much of their capital equipment. The shocks also have a significant positive effect on consumption. Government consumption responds almost twice as strongly as private consumption. The shocks have no effect on savings and adversely affect the trade and current account balances. There is a significant positive effect on the output of all main categories of nontradables. But Dutch disease effects are strikingly absent. Agriculture and manufacturing do not contract in reaction to an oil price increase. Dutch disease effects may be absent in part because of policy-induced output restraints in the oil sector, or because of the enclave nature of the oil sector, which does not participate in domestic factor markets.
Oil Shocks And External Balances
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2007-05-01
Oil Shocks And External Balances written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-05-01 with Business & Economics categories.
This paper studies the effects of demand and supply shocks in the global crude oil market on several measures of countries' external balance, including the oil and non-oil trade balances, the current account, and changes in net foreign assets (NFA) during 1975-2004. We explicitly take a global perspective. In addition to the U.S., the Euro area and Japan, we consider a number of country groups including oil exporters and middle-income oil-importing economies. We find that the effect of oil shocks on the merchandise trade balance and the current account, which depending on the source of the shock can be large, depends critically on the response of the nonoil trade balance, and differs systematically between the U.S. and other oil importing countries. Using the Lane-Milesi-Ferretti NFA data set, we document the presence of large and systematic (if not always statistically significant) valuation effects in response to oil shocks, not only for the U.S., but also for other oil-importing economies and for oil exporters. Our estimates suggest that increased international financial integration will tend to cushion the effect of oil shocks on NFA positions for major oil exporters and the U.S., but may amplify it for other oil importers.