On Economic Policy Responses to Disruptions: A Reply to Harry Saunders

At its heart, Harry Saunders' Comment raises two principal criticisms I of the EMF study, "Macroeconomic Impacts of Energy Shocks"; The EMF study held constant the disrupted-state world oil price; effects of policy actions on the world oil price were not included. Saunders faults the EMF for not explicitly examining these effects. But further, he implies that, in estimating effects of policy actions to counter the oil shock, modelers should have held constant the disrupted-state quantity of oil consumed in the US.