Declining Effects of Oil-Price Shocks
Output responses to oil-price shocks not only tend to be weaker, but also to peak earlier recently. This paper builds a model that incorporates a realistic structure of US petroleum consumption and explores three possible explanations for the changes. The rst is based on deregulation in the transportation sector, which has brought more competition and improved eciency in the industry. The second is overall improve- ments in use of energy. The third is less persistence of the oil-price shock. Under realistic parameter values, it is demonstrated that all three factors play an important role quantitatively. These three factors together could account for a 51% reduction in the peak response of output to an oil-price shock.
Authors: | Katayama, Munechika |
---|---|
Institutions: | Department of Economics, Ourso College of Business |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Costly Labor Reallocation, Non-Separable Preferences, and Expectation Driven Business Cycles
Katayama, Munechika,
-
Intertemporal Substitution and Sectoral Comovement in a Sticky Price Model
Katayama, Munechika,
-
Housing, Wealth Effects, and Monetary Policy
Kim, Kwang Hwan, (2013)
- More ...