Meta-Analysis of the Oil Price Elasticity of the GDP for Policy Analysis [electronic resource] : Documentation
- Washington, D.C. : United States. Dept. of Energy, 2017. and Oak Ridge, Tenn. : Distributed by the Office of Scientific and Technical Information, U.S. Dept. of Energy
- Physical Description:
- 35 pages : digital, PDF file
- Additional Creators:
- Oak Ridge National Laboratory, United States. Department of Energy, and United States. Department of Energy. Office of Scientific and Technical Information
- Restrictions on Access:
- Free-to-read Unrestricted online access
- Given the important role of oil in economic activities, policy makers are interested in estimates of the potential damage to the economy from oil price shocks, particularly during periods of rapid and large increases that accompany severe shocks. Such estimates are needed to quantify the economic costs of oil price shocks, and to evaluate the potential benefits of alternative policy responses. Although research on the economic impacts of oil price shocks is extensive and has generally found that large increases in oil prices exert negative economic impacts, the range of estimates, summarized by the oil price elasticity of the GDP or other aggregate measure of economic activity, is very wide. There are also conditions under which the relationship between the oil price and the economy could be positive. The range of estimates of the oil price elasticity of the GDP for the United States is typified by averages from the studies of Hamilton (2005, 2012) and Kilian and Vigfusson (2014), in which the implied elasticities were -0.014 to - 0.069 and +0.004 to -0.052, respectively. We employ a meta-regression approach to systematically summarize available estimates of the oil price elasticity of the GDP for oil importing economies, and examine the role of key factors. The resulting regression model was used to estimate the oil price elasticity of the GDP for the United States. Based on this we estimate the mean elasticity for the United States at -0.0238, with a 68% confidence interval of -0.0075 to -0.0402, four quarters after a shock.
- Published through SciTech Connect., 08/01/2017., "ornl/tm--2016/255", "68032", and Paul Newsome Leiby; David Charles Bowman; Gbadebo A. Oladosu; Rocio Uria Martinez; Megan M. Johnson.
- Funding Information:
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