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

Dohyoung Kwon

International Journal of Finance & Economics, 2024, vol. 29, issue 2, 2515-2526

Abstract: 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.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/ijfe.2802

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:29:y:2024:i:2:p:2515-2526

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().