quantile serial dependence in crude oil markets evidence from improved quantilogram analysis with quantile wild bootstrapping we examine the quantile serial dependence in crude oil prices based on the linton and whang s quantile based portmanteau test which we improved by means of quantile wild bootstrapping qwb through monte carlo simulation we find that the quantile wild bootstrap based portmanteau test performs better than the bound testing procedure suggested by linton and whang we apply the improved test to examine the efficiency of two crude oil markets wti and brent we also examine if the dependence is stable via rolling sample tests our results show that both wti and brent are serially dependent in all except the median quantiles these findings suggest that it may be misleading to examine the efficiency of crude oil markets in terms of mean or median returns only these crude oil markets are relatively more serially dependent in non median ranges

oil price cycles and wavelets abstract the present paper addresses the question of the oil price macroeconomy relationship using world data and a time scale decomposition based on the theory of wavelets our approach is based on a global indicator the morgan stanley capital international msci index for the world and on the new framework offered by wavelets to analyse the oil price cycles and to investigate the oil price msci relationship this original approach enables us to identify that the cycles which contribute the most to oil price variations are 20 to 40 years cycles which correspond to the size of kuznets infrastructure cycles and probably represent energy investment cycles this wavelet decomposition also provides additional evidence to the reverse causality theory

the role of the trade channel in the propagation of oil supply shocks abstract this paper analyzes when and why idiosyncratic oil supply shocks produce large macroeconomic effects in an analytically tractable two country general equilibrium model we focus on a demand driven mechanism the trade channel which transmits oil shocks across economies through changes in the non oil goods terms of trade when the trade channel is operative we have three main consequences on the transmission of oil shocks first the macroeconomic impact of oil shocks may be large and asymmetric across countries second the magnitude of the effects is nonlinear in the size of the oil shock third terms of trade movements never ensure international risk sharing after an idiosyncratic oil supply shock

effects of energy price rise on investment firm level evidence from indian manufacturing sector this paper analyses the effects of the rising prices of energy products on the investment of a large panel of manufacturing firms in india during 1993 2013 the prime motivation behind this study is the absence of an empirical study into this research issue exclusively on indian economy the empirical results obtained by estimating an error correction model ecm using generalized method of moments gmm show that energy price rise has negative effect on the investment of firms in the manufacturing sector the negative effect is transmitted to the firm s investment through both demand side and supply side factors the transmission also depends upon factors such as the energy intensity of production the results also show that the sales growth investment relationship becomes weak in the face of the rising prices of the energy which could be due to the cautious approach to investment adopted by the firms therefore it calls for the attention of the policy makers to evolve a comprehensive energy policy to ensure continuous supply of energy at affordable prices to the manufacturers

us monetary policy and sectoral commodity prices abstract using a structural var svar model we examine the effects of the monetary policy of the united states on sectoral commodity prices including the non fuel commodity prices food prices beverage prices prices of agricultural raw materials prices of metals and prices of fuel energy commodities and macroeconomic activity the empirical evidence suggests that a u s monetary contraction leads to an immediate rise in the broad commodity price index which possibly reflects an aggregation bias greater expected inflation and speculation high production costs or some overshooting due to overreactions then the response erodes after six quarters as the positive interest rate shock vanishes and higher interest rates and liquidity drainage take traction despite this the aggregate price response masks the existence of significant heterogeneity in the price responses of the different types of commodity sectors more specifically a positive interest rate shock leads to i an initial pop in the price returns of the non fuel commodities which later reverses path and becomes negative as in the case of the prices of agricultural raw materials ii a positive and persistent rise in the volatile food prices iii a fall in the beverage prices and iv a persistent reduction in the prices of metals and the prices of energy prices our results also remain globally intact with respect to alternative specifications and identification schemes as well as to unconventional monetary policy effects similar results are also found when commodity futures prices are used we conclude that policymakers should recognize the source of sector inflation before embarking on contractionary monetary policy the design of core inflation targeting is also preferable to headline inflation targeting

supply shocks and monetary policy revisited written almost a decade after the first attempts in 1974 to develop a theory of policy response to supply shocks this paper uses a simple algebraic framework to summarize the central issues posed by supply shocks for macroeconomic policy primary emphasis goes to the case for and against monetary accommodation on the nature and extent of wage indexation and on the distinction between permanent and transitory shocks given the difficult tradeoffs faced by monetary policy makers supply side alternatives may represent the best available policy options 20 references

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

energy price shocks and medium term business cycles abstract energy price shocks pose sudden challenges to economies this paper examines how oil price shocks have influenced the u s economy over the last decades and especially focuses on the productivity slowdown in the years following an oil price shock we extend the existing literature by considering medium term business cycles which consist of high frequency components conventional business cycles up to 8 years and medium frequency components 8 50 years we find that the medium frequency consequences of energy price shocks are considerable and explain a significant part of the productivity slowdown

oil price shocks and the macroeconomy this paper examines the impact of oil price shocks and attempts to explain why the rise in oil prices up to 2008 had little impact on the world economy it makes three main arguments first that oil prices have never been as important as is popularly thought second that the most important route through which oil prices affect output is monetary policy when oil prices pass through to core inflation monetary authorities raise interest rates slowing growth based on the second argument the third argument is that high oil prices have not reduced growth in recent years because they no longer pass through to core inflation so the monetary tightening previously seen in response to high oil prices is absent it also argues that oil prices had little impact on the global recession of 20089

crude oil prices and liquidity the bric and g3 countries unanticipated increases in the bric countries liquidity lead to significant and persistent increases in real oil prices global oil production and global real aggregate demand unanticipated shocks to the liquidity of developed countries over 1997 01 2011 12 do not the relative contribution to real oil price of liquidity in bric countries to liquidity in developed countries is much greater since 2005 than before 2005 china and india drive the results for the effect of bric countries liquidity on real oil price and global oil production china and india and brazil and russia reinforce one another on the effect of liquidity on global real aggregate demand due to the difference between countries as commodity importers exporters the liquidity of brazil and russia increases significantly with a rise in real oil price and that of china and india decreases significantly with a rise in real oil price it is shown that the strong rebound in oil price during 2009 is mostly due to strong effects of shocks to liquidity in the bric countries the analysis helps in assessing the importance of the bric economies in the upsurge of the real price of crude oil

efficiency of crude oil markets evidences from informational entropy analysis abstract the role of crude oil as the main energy source for the global economic activity has motivated the discussion about the dynamics and causes of crude oil price changes an accurate understanding of the issue should provide important guidelines for the design of optimal policies and government budget planning using daily data for wti over the period january 1986 march 2011 we analyze the evolution of the informational complexity and efficiency for the crude oil market through multiscale entropy analysis the results indicated that the crude oil market is informationally efficient over the scrutinized period except for two periods that correspond to the early 1990s and late 2000s us recessions overall the results showed that deregulation has improved the operation of the market in the sense of making returns less predictable on the other hand there is some evidence that the probability of having a severe us economic recession increases as the informational efficiency decreases which indicates that returns from crude oil markets are less uncertain during economic downturns

the impact of coal price fluctuations on china s economic output abstractdue to the important role of coal in china s macroeconomic growth the price of coal significantly influences its economic output employing a var model a cointegration test and a state space model of time varying variables this article analyses the influence of coal price fluctuations on the volume and structure of china s economic output including both the strength and the time delay of such influence this article further explores the corresponding relationships between coal price fluctuations and variations in the effects of these fluctuations to analyse the asymmetric influence of coal price fluctuations on china s macroeconomy coal price fluctuations exerted significant long term positive effects and short term negative effects on china s output variables with an average delay of 11 months they had positive effects on investment and consumption over the long term and an increasingly negative effect on imports and exports the average delays were 9 months for investment 6 5 months for

granger predictability of oil prices after the great recession abstract real oil prices surged from 2009 through 2014 comparable to the 1970s oil shock period standard explanations based on monopoly markup fall short since inflation remained low after 2009 this paper contributes strong evidence of granger 1969 predictability of nominal factors to oil prices using one adjustment to monetary aggregates this adjustment is the subtraction from the monetary aggregates of the 2008 2009 federal reserve borrowing of reserves from other central banks swaps made after us reserves turned negative this adjustment is key in that granger predictability from standard monetary aggregates is found only with the swaps subtracted

dynamic cyclical comovements of oil prices with industrial production consumer prices unemployment and stock prices abstract this paper examines the empirical relationship between oil prices and several key macroeconomic variables in particular we investigate the cyclical comovements of crude oil prices with output consumer prices unemployment and stock prices the methodology involves the use of the hodrick prescott hodrick r j prescott e c 1980 post war us business cycles an empirical investigation working paper carnegie mellon university and baxter king baxter m king r g 1999 measuring business cycles approximate band pass filters for economic time series review of economics and statistics 81 575 593 filters as well as the recently developed full sample asymmetric christiano fitzgerald christiano l j fitzgerald t j 2003 the band pass filter international economic review 44 435 465 band pass filter contemporaneous and cross correlation estimates are made using the stationary cyclical components of the time series to make inference about the degree to which oil prices move with the cycle besides documenting a number of important cyclical relationships using three different time series filtering methods the results suggest that crude oil prices are procyclical and lag industrial production additionally we find that oil prices lead consumer prices

industrial specialization and the returns to labor comparative advantage and the division of labor make geographic concentration of production within a nation profitable and cause many cities to be specialized in one or a few main industries specialized cities however suffer greater unemployment risk the theory of compensating wage differentials predicts that individuals living in more specialized cities will be compensated in the form of higher wage rates we study the effects of specialization on wages and unemployment in the united states we find evidence of compensating wage differentials that firms choose to locate in more specialized higher wage cities is indirect evidence of the gains to specialization

electricity consumption and economic growth exploring panel specific differences abstract in this paper we examine the long and short run dynamics between electricity consumption and economic activities using panel data of per capita electricity consumption and per capita gdp of 160 countries for the period of 1980 2010 accounting for the degree of electricity dependence and the level of urbanization furthermore in order to capture the differences in this relationship the full sample is divided into various subsamples based on countries income levels regional locations and oecd memberships this framework is argued and found to be appropriate since the causal links and inferences arising therefrom differ considerably among the subsamples which led us to conclude that the electricity growth nexus is highly sensitive to regional differences countries income levels urbanization rates and supply risks

sectoral exposure of financial markets to oil risk factors in brics countries abstract in this paper we examine the exposure of sectoral equity returns to changes in oil risk factors among brics markets the paper combines var model together with the random forest technique to provide a novel framework which overcome some weaknesses in var modelling and help in the selection of oil risk factors considered our results in general show that the response of sectoral stocks to changes in oil risk factors is not homogenous and their sensitivities are not uniform across brics markets stock returns of basic materials financials and industrials sectors show consistently negative sensitivity to crude oil volatility ovx and oil price shocks for major oil importers whereas sectoral stocks among major oil exporters seems to demonstrate systematic pattern to explain sectoral stock variations the results reveal ovx and oil to be the most significant risk transmitting factors in brics irrespective of whether the market is a major oil importer or exporter however our results also confirm the presence of asymmetric effects in sectoral stocks for brazil and russia while no such evidence is found for india china and south africa overall the findings suggest that the manner in which sectors respond to fluctuations in oil risk factors varies between different sectors and it depends on the oil characteristics of the markets nature of sectors and the type of oil risk factors considered

iranian oil free zone and international oil prices abstract one of the main elements of economic sanctions against iran due to its nuclear and military programs is crude oil exportation restrictions in addition to investment in iranian energy related projects senders of such sanction are interested in understanding the impacts of such embargos on international oil prices we apply unrestricted vector autoregressive var model using impulse response functions irf and variance decomposition analysis vda tools with annual data from 1965 to 2012 to analyze the dynamic response of international oil prices to iranian oil export sanction controlling for the supply of non iranian oil the world gdp per capita and post islamic revolution exogenous dummy variables we show that international oil prices respond negatively and statistically significant to increasing shock in absolute negative changes of the iranian oil exports our proxy of iran oil sanctions following the first 2 years after shock the main reason is the positive response of the non iranian oil supply to negative shocks in iranian oil exports filling the missing supply of iranian oil in international markets

do increases in petroleum product prices put the incumbent party at risk in us presidential elections this article investigates the impact of petroleum product prices on recent united states presidential elections by modelling the probability of the incumbent presidential party losing a state under the united states electoral college system it had carried the previous presidential election the main finding is that the probability of the incumbent party losing a state previously carried increases with petroleum product prices but only in those states that have primarily energy consuming economies we also find that increases in the number of international conflicts increases in real state per capita income growth and increases in state per capita grants in aid all reduce the likelihood of losing previously carried states while higher taxation growth increases this likelihood

an identification robust test for time varying parameters in the dynamics of energy prices summary we test for the presence of time varying parameters tvp in the long run dynamics of energy prices for oil natural gas and coal within a standard class of mean reverting models we also propose residual based diagnostic tests and examine out of sample forecasts in sample lr tests support the tvp model for coal and gas but not for oil though companion diagnostics suggest that the model is too restrictive to conclusively fit the data out of sample analysis suggests a random walk specification for oil price and tvp models for both real time forecasting in the case of gas and long run forecasting in the case of coal copyright 2010 john wiley sons ltd

world steel production a new monthly indicator of global real economic activity this paper proposes world steel production as an indicator of global real economic activity world steel production data is published with only a one month delay thereby providing timely information for world real gdp forecasters we find that world steel production and lutz kilian s 2009 index of global real economic activity generate large gains in forecasting world real gdp relative to an autoregressive benchmark a forecast combination of world steel production kilian s 2009 index of global real economic activity and an index of the industrial production of oecd countries plus six non oecd emerging economies produces significant gains in forecasting world real gdp relative to an autoregressive benchmark

oil price and financial markets multivariate dynamic frequency analysis the aim of this paper is to study the degree of interdependence between oil price and stock market index into two groups of countries oil importers and oil exporters to this end we propose a new empirical methodology allowing a time varying dynamic correlation measure between the stock market index and the oil price series we use the frequency approach proposed by priestley and tong 1973 that is the evolutionary co spectral analysis this method allows us to distinguish between short run and medium run dependence in order to complete our study by analysing long run dependence we use the cointegration procedure developed by engle and granger 1987 we find that interdependence between the oil price and the stock market is stronger in exporters markets than in the importers ones

impacts of oil price shocks on the united states economy a meta analysis of the oil price elasticity of gdp for net oil importing economies policy makers are interested in estimates of the potential economic impacts of oil price shocks particularly during periods of rapid and large increases that accompany severe supply shocks literature estimates of the economic impacts of oil price shocks summarized by the oil price elasticity of gdp span a very wide range due to both fundamental economic and methodological factors this paper presents a quantitative meta analysis of the oil price elasticity of gdp for net oil importing countries with a focus on the united states us the full range of estimates of the oil price elasticity of gdp for the us in the data is 0 124 to 0 017 accounting for different methodologies data and other factors we employ a meta regression model that controls for key determinant factors to estimate the mean and variance of the gdp elasticity across studies we use a robust estimation technique to deal with heterogeneity of the data and well known econometric issues that confront meta analysis the resulting regression model is used to simulate the oil price elasticity of gdp for the us with a mean of 0 020 and 68 confidence interval of 0 035 to 0 006 four quarters after a shock

imperfect competition and the effects of energy price increases on economic activity the authors show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil plausibly parameterized models of this type are able to mimic the response of output and real wages in the united states the responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output copyright 1996 by ohio state university press

the relationship between oil price shocks and china s macro economy an empirical analysis china postdoctoral science foundation 20090460751 ministry of education of the people s republic of china 09yjc790167 09yja820074 national social science funds 09zd050 08ajy031

modeling oil price us stock nexus a varma bekk agarch approach abstract this study adds to the existing literature on oil price us stock nexus in three ways first it employs the varma agarch model developed by mcaleer et al 2009 within the context of bekk framework using west texas intermediate wti and brent as proxies for oil market and s p stocks as a proxy for us stock market secondly it modifies the model to include endogenously determined structural break using the general structure for analyzing breaks with unit roots in perron 2006 third it uses the adopted model to compute optimal portfolio weight and hedge ratios between oil price and us stocks using different sample data based on the break date on average our empirical evidence suggests a significant positive return spillover from us stock market to oil market and bi directional shock spillovers between the two markets in addition there is significant own asymmetric shock effect in both markets while volatility spillover from oil market to stock market became pronounced after the break which coincides with the period of global economic slowdown similarly the results of portfolio management differ across the sample data more importantly we find that ignoring structural break when it exists may exaggerate hedging effectiveness

the effects of oil price shocks on u s stock order flow imbalances and stock returns this paper investigates for the first time the effects of oil demand shocks and oil supply shocks on stock order flow imbalances leading to changes in stock returns through the estimation of a structural var model positive oil demand shocks are able to explain almost 36 of the observed variation in the daily average stock order flow imbalances measured by the buy sell trades ratio which consequently lead to a negative rather than positive stock returns reaction in contrast oil supply shocks exhibit a negative and marginally significant effect on stock order flow imbalances our aggregate analysis suggests that positive shocks on stock order flow imbalances are negatively related to stock returns these effects are stronger for oil related sectors when compared with the rest of the equities sectors

the nairu in theory and practice airu stands for the nonaccelerating ine ation rate of unemployment it is beyond dispute that this acronym is an ugly addition to the english language there are however two issues that fail to command consensus among economists which we address in this essay the e rst issue is whether the concept of the nairu is a useful piece of business cycle theory we believe it is and we begin this paper by attempting to explain why in our view the nairu is approximately a synonym for the natural rate of unemployment this concept follows naturally from any theory that says that changes in monetary policy and aggregate demand more generally push ine ation and unemployment in opposite directions in the short run once this short run tradeoff is admitted there must be some level of unemployment consistent with stable ine ation the second issue is why the nairu changes over time and in particular why it fell in the second half of the 1990s this question is more dife cult and the answer is open to debate most likely various factors are at work including demographics and government policies yet one hypothesis stands out as particularly promising e uctuations in the nairu appear related to e uctuations in productivity in the 1970s the nairu rose when productivity growth slowed in the 1990s the nairu fell when productivity growth sped up developing and testing models that explain the links among ine ation unemployment and productivity remains a challenge for students of business cycle theory

oil price pass through into inflation abstract this paper uses data from 19 industrialized countries to investigate oil price pass through into inflation across countries and over time a time varying pass through coefficient is estimated and the determinants of the recent declining effects of oil shocks on inflation are investigated the appreciation of the domestic currency a more active monetary policy in response to inflation and a higher degree of trade openness are found to explain the decline in oil price pass through

a data envelopment analysis based framework for the relative performance evaluation of competing crude oil prices volatility forecasting models abstract forecasts of crude oil prices volatility are important inputs to many decision making processes in application areas such as macroeconomic policy making risk management options pricing and portfolio management despite the fact that a large number of forecasting models have been designed to forecast crude oil prices volatility so far the relative performance evaluation of competing forecasting models remains an exercise that is unidimensional in nature to be more specific most studies tend to use several criteria and their measures to assess the relative performance of these models but competing models are always ranked by performance measure thus leading in general to different rankings for different criteria and to a situation where one cannot make an informed decision as to which model performs best with respect to all criteria under consideration the purpose of this paper is to propose a single ranking that takes account of several criteria using a data envelopment analysis framework our empirical results reveal that the unidimensional rankings for different criteria might differ significantly and that the multidimensional ranking of some models could be substantially different from their unidimensional rankings which highlights the importance of the proposed performance evaluation tool

forecasting oil prices high frequency financial data are indeed useful abstract the paper examines the importance of combining high frequency financial information along with the oil market fundamentals in order to gain incremental forecasting accuracy for oil prices inspired by french et al 1987 and bollerslev et al 1988 who maintain that future asset returns are also influenced by past volatility we use daily volatilities and returns from financial and commodity markets to generate real out of sample forecasts for the monthly oil futures prices our results convincingly show that although the oil market fundamentals are useful for long run forecasting horizons the combination of the latter with high frequency financial data significantly improve oil price forecasts by reducing the rmse of the no change forecast by approximately 68 results are even more impressive during the oil price collapse period of 2014 15 these findings suggest that we cannot ignore the information extracted from the financial markets when forecasting oil prices our results are both statistically and economically significant as suggested by several robustness tests

the new econometrics of structural change dating breaks in u s labor productivity we have seen the emergence of three major innovations in the econometrics of structural change in the past fifteen years 1 tests for a structural break of unknown timing 2 estimation of the timing of a structural break and 3 tests to distinguish unit roots from broken time trends these three innovations have dramatically altered the face of applied time series econometrics in this paper we review these three innovations and illustrate their application through an empirical assessment of u s labor productivity in the manufacturing durables sector

relationships between oil price shocks and stock market an empirical analysis from china this paper investigates the interactive relationships between oil price shocks and chinese stock market using multivariate vector auto regression oil price shocks do not show statistically significant impact on the real stock returns of most chinese stock market indices except for manufacturing index and some oil companies some important oil price shocks depress oil company stock prices increase in oil volatility may increase the speculations in mining index and petrochemicals index which raise their stock returns both the world oil price shocks and china oil price shocks can explain much more than interest rates for manufacturing index

time varying persistence in real oil prices and its determinant abstract we provide empirical evidence for pronounced time variation in the persistence of real oil prices in particular we find episodes of mild explosiveness next to periods with random walk and also mean reverting behavior we address the question whether dynamic persistence can be directly related to macro financial variables spot futures spreads spill over effects from commodities and global real economic activity alongside these variables we use a large data set of more than one hundred fifty potential determinants featuring for example further oil related variables production and inventories and key macroeconomic series for the g7 countries by using model averaging techniques we robustly account for the inherent model uncertainty when dealing with such many potential explanatory variables as it turns out the one and only significant measure to explain time varying oil price persistence is the index of global real economic activity by kilian 2009 other variables related to e g supply shocks or speculation are however insignificant in line with recent findings we argue that fundamentals rather than speculation were the drivers of the explosive oil price in the 2000s

does the source of oil price shocks matter for south african stock returns a structural var approach abstract in this paper we investigate the dynamic relationship between different oil price shocks and the south african stock market using a sign restriction structural var approach for the period 1973 01 to 2011 07 the results show that for an oil importing country like south africa stock returns only increase with oil prices when global economic activity improves in response to oil supply shocks and speculative demand shocks stock returns and the real price of oil move in opposite directions the analysis of the variance decomposition shows that the oil supply shock contributes more to the variability in real stock prices the main conclusion is that different oil price shocks affect stock returns differently and policy makers and investors should always consider the source of the shock before implementing a policy and making investment decisions

the seven sisters versus opec solving the mystery of the petroleum market structure abstract this paper provides an explanation of the changing behavior of the crude oil market and tests it using the u s data from january 1913 to september 2014 we claim that the crude oil market has experienced two important structural breaks in its industrial organization the first occurred when venezuela and the arab crude oil exporting countries forced the so called seven sisters to sign the fifty fifty profit sharing agreements the second occurred after opec succeeded in cracking the secrets of the international crude oil marketing and in undertaking the wave of nationalizations of the 1970s

the effects of oil price shocks on output and inflation in china crude oil price shocks derive from many sources each of which may bring about different effects on macro economy variables and require completely different designs in macro economic policy thus distinguishing the sources of oil price fluctuations is crucial when evaluating these effects this paper establishes an open economy dynamic stochastic general equilibrium dsge model with two economies china and the rest of the world to assess the effects of oil price shocks the ces production function is extended by adding oil as an input based on the model the effects of four types of oil price fluctuations are evaluated the four types of oil price shocks are supply shocks driven by political events in opec countries other oil supply shocks aggregate shocks to the demand for industrial commodities and demand shocks that are specific to the crude oil market simulation results indicate the following oil supply shocks driven by political events mainly produce short term effects on china s output and inflation while the other three shocks produce relatively long term effects in addition demand shocks that are specific to the crude oil market contribute the most to the fluctuations in china s output and inflation

dynamic cyclical comovements between oil prices and us gdp a wavelet perspective abstract in this paper we use wavelet analysis to investigate the cyclical comovements between crude oil prices and us gdp taking into account the decline in the volatility of us gdp growth that has occurred since the mid 1980s our main findings suggest that before 1984 q1 the crude oil prices were leading the us gdp cycle by 3 quarters and granger cause us gdp in contrast after 1984 q1 the crude oil prices were lagging the us business cycle and a reverse causality is found to run from us gdp to oil prices the multiscale granger causality tests globally corroborate theses results

cross country differences in the effects of oil shocks abstract we compare the macroeconomic consequences of several types of oil shocks across a set of industrialized countries that are structurally very diverse with respect to the role of oil and other forms of energy in the economy the results crucially depend on the underlying source of the oil price shift when a rise in oil prices is caused by increased global economic activity or a rise in oil specific demand almost all countries experience respectively a temporary increase and transitory decline of real gdp the role of oil and other forms of energy cannot explain the differences in the effects of both shocks across countries in contrast this role is very important to explain asymmetries in the effects of exogenous oil supply shocks whereas net oil and energy importing countries typically face a permanent fall in economic activity the impact is insignificant or even positive in net energy exporting countries in addition countries that improved their net energy position the most over time became less vulnerable to oil supply shocks relative to other countries

historical energy price shocks and their changing effects on the economy abstract the purpose of this paper is to identify the changes in the impact of energy shocks on economic activity with an interest in assessing if an economy s vulnerability and resilience to shocks improved with economic development using data on the united kingdom over the last three hundred years the paper identifies supply aggregate demand and residual shocks to energy prices and estimates their changing influence on energy prices and gdp the results suggest that the impacts of supply shocks rose with its increasing dependence on coal and declined with its partial transition to oil however the transition from exporting coal to importing oil increased the negative impacts of demand shocks more generally the results indicate that improvements in vulnerability and resilience to shocks did not progress systematically as the economy developed instead the changes in impacts depended greatly on the circumstances related to the demand for and supply of energy sources if these experiences are transferable to future markets a transition to a diversified mix of renewable energy is likely to reduce vulnerability and increase resilience to energy price shocks

the consequences of the us doj s antitrust activities a macroeconomic perspective do the antitrust law enforcement activities of the us department of justice act as exogenous technology shocks or as markup shocks limiting market power and promoting economic growth we analyze annual time series data from 1947 to 2003 on three measures of federal antitrust intervention the ratio of the antitrust division s budgetary expenditures to gdp as well as the numbers of civil and criminal antitrust cases instituted we find that changes in the levels of these policy variables act like negative technology shocks and that the negative effects are transitory antitrust policy generates no subsequent offsetting increases in productivity

the impact of competition on management quality evidence from public hospitals in this paper we examine the causal impact of competition on management quality we analyze the hospital sector where geographic proximity is a key determinant of competition and english public hospitals where political competition can be used to construct instrumental variables for market structure since almost all major english hospitals are government run closing hospitals in areas where the governing party has a small majority is rare due to fear of electoral punishment we find that management quality measured using a new survey tool is strongly correlated with financial and clinical outcomes such as survival rates from emergency heart attack admissions ami more importantly we find that higher competition as indicated by a greater number of neighboring hospitals is positively correlated with increased management quality and this relationship strengthens when we instrument the number of local hospitals with local political competition adding another rival hospital increases the index of management quality by one third of a standard deviation and leads to a 10 7 reduction in heart attack mortality rates

oil price shocks and stock markets in the u s and 13 european countries abstract oil price shocks have a statistically significant impact on real stock returns contemporaneously and or within the following month in the u s and 13 european countries over 1986 1 2005 12 norway as an oil exporter shows a statistically significantly positive response of real stock returns to an oil price increase the median result from variance decomposition analysis is that oil price shocks account for a statistically significant 6 of the volatility in real stock returns for many european countries but not for the u s increased volatility of oil prices significantly depresses real stock returns the contribution of oil price shocks to variability in real stock returns in the u s and most other countries is greater than that of interest rate an increase in real oil price is associated with a significant increase in the short term interest rate in the u s and eight out of 13 european countries within one or two months counter to findings for the u s and for norway there is little evidence of asymmetric effects on real stock returns of positive and negative oil price shocks for oil importing european countries

a wavelet analysis of mean and volatility spillovers between oil and brics stock markets this paper investigates the spillover effects of volatility and shocks between oil prices and the brics stock markets using multivariate approach and wavelet analysis at different time horizons hence we combine a multivariate arma garch model and wavelet multiresolution analysis to study this phenomenon a bivariate arma 1 1 garch 1 1 cdcc student t model was joined with modwt filter to capture a broad range of possible spillover effects in mean and variances of level prices at various time horizons generally empirical results provide strong evidence of time varying volatility in all markets under study however our proposed approach shows that oil price and stock market prices are directly affected by their own news and volatilities and indirectly affected by the volatilities of other prices and wavelet scale the results show also that mean and volatility spillover effects was decomposed into many sub spillovers on different time scales according to heterogeneous investors and market participants the practical implications of this study are critical innovative and useful for the local and international investors and also for the portfolio managers they can utilize this study to formulate the optimal oil bricks stock portfolios as well as lead to more accurate predictions of volatility spillovers patterns also in developing their hedging strategies

an empirical analysis of the relationship between oil prices and the chinese macro economy using the quarterly data from the first quarter of 1996 to the fourth quarter of 2014 this paper studies the relationship between oil prices and the chinese macro economy we find output and interest rate respond significantly to oil price shocks further analysis reveals that the positive response of output to oil price shocks is attributed to the influences of oil price shocks on exports the oil price shocks have both longer and deeper effects on the exports of state owned enterprises than on those of foreign investment enterprises moreover the response of exports to oil price shocks is symmetric finally oil prices are found to be useful for forecasting the china s exports in the periods shorter than about two years

the impact of oil shocks on the spanish economy abstract this paper analyses the impact of oil price shocks on both the gdp growth and on inflation in the economy of spain and its seventeen regions the qu and perron 2007 and the bai and perron 1998 2003a and 2003b methods identify different periods across the sample evidence of a diminishing effect of oil price shocks on gdp growth and on inflation is found from the 1970s until the mid 1980s however in contrast with previous literature we find a renewed effect on both these macroeconomic variables after the mid 80s in spain it recovers some of its initial importance in the second half of the 1990s for gdp and between 1986 and 1994 and the 2000s for inflation in the regions the influence of oil price shocks on the gdp progressively disappears while the impact on inflation decreases from 1986 onwards but becomes significant again ten years later the most outstanding result is that oil price movements explain at least some of the recent inflation therefore policy measures to control the economic impact of oil shocks should be implemented in the future

a neoclassical model of unemployment and the business cycle this paper investigates a general equilibrium model of unemployment and the business cycle in which specialization of labor plays a key role a rational expectations equilibrium with fully flexible wages and prices can exhibit unemployment in which the marginal product of employed workers exceeds the reservation wage of those who are without jobs workers are unemployed either because they are in the process of relocating for a better job or because they are waiting for conditions in the depressed sector to improve moreover seemingly small disruptions in the supplies of primary commodities such as energy could be the source of fluctuations in aggregate employment and can exert surprisingly large effects on real output

declining effects of oil price shocks in recent years output responses to oil price shocks have not only been weaker but have also reached their trough earlier this paper builds a model that incorporates a realistic structure of u s petroleum consumption and explores three possible explanations for the changes the possible factors considered are i deregulation in the transportation industry ii improved energy efficiency and iii a lower degree of persistence of oil price shocks under realistic parameter values the three factors play an important role quantitatively accounting for half of the reduction in the largest impact on output of an oil price shock over time

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

oil and the macroeconomy since the 1970s economists have long been intrigued by empirical evidence that suggests that oil price shocks may be closely related to macroeconomic performance this interest dates back to the 1970s the 1970s were a period of growing dependence on imported oil unprecedented disruptions in the global oil market and poor macroeconomic performance in the united states thus it was natural to suspect a causal relationship from oil prices to u s macroeconomic aggregates since then a large body of work has accumulated that purports to establish this link on theoretical grounds and to provide empirical evidence in its support we do not attempt a comprehensive survey of this literature but rather provide an idiosyncratic synthesis of what we view as the key issues in this debate and the insights gained over the last 30 years the timing seems right for such an account although the experience of the 1970s continues to play an important role in discussions of the link between oil and the macroeconomy there have been a number of new oil price shocks since the 1970s notably the 1986 collapse of oil prices and the 2000 boom in oil prices as well as the oil price increases associated with the 1990 1991 gulf war and the 2003 iraq war given this richer case history we are arguably in a better position than two decades ago to distinguish the idiosyncratic features of each oil crisis from the systematic effects increases in oil prices have been held responsible for recessions periods of excessive inflation reduced productivity and lower economic growth in this paper we review the arguments supporting such views first we highlight some of the conceptual difficulties in assigning a central role to oil price shocks in explaining

the impact of oil price shocks evidence from the industries of six oecd countries most of the studies about the macroeconomic consequences of oil price shocks have been focused on us aggregate data in contrast to these studies this paper empirically assesses the dynamic effect of oil price shocks on the output of the main manufacturing industries in six oecd countries the pattern of responses to an oil price shock by industrial output is diverse across the four european monetary union emu countries under consideration france germany italy and spain but broadly similar in the uk and the us moreover evidence on cross industry heterogeneity of oil shock effects within the emu countries is also reported

employment and unemployment in the 1930s the great depression is to economics what the big bang is to physics as an event the depression is largely synonymous with the birth of modern macroeconomics and it continues to haunt successive generations of economists with respect to labor and labor markets these facts evidently include wage rigidity persistently high unemployment rates and long term joblessness traditionally aggregate time series have provided the econometric grist for distinguishing explanations of the great depression recent research on labor markets in the 1930s however has shifted attention from aggregate to disaggregate time series and towards microeconomic evidence this shift in focus is motivated by two factors first disaggregated data provide many more degrees of freedom than the decade or so of annual observations associated with the depression and thus may prove helpful in distinguishin g macroeconomic explanations second disaggregation has revealed aspects of economic behavior hidden in the time series that may be essential to their proper interpretation and in any case are worthy of study in their own right although the substantive findings of recent research are too new to judge their permanent significance i believe that the shift towards disaggregated analysis is an important contribution the paper begins by reviewing the conventional statistics of the united states labor market during the great depression and the paradigms to explain them it then turns to recent studies of employment and unemployment using disaggregated data of various types the paper concludes with discussions of

does industrial diversity always reduce unemployment evidence from the great depression and after a portfolio model of employment predicts that cities with more diversified employment opportunities should experience lower unemployment rates than less diversired cities empirical analysis of the diversity unemployment relationship using census data support the portfolio theory for the years 1950 1960 and 1970 during the early months of the great depression however industrially more diversired cities experienced higher rather than lower rates of unemployment by combining the portfolio model of employment with the lucas phelps islands model the anomalous effect of diversity in 1931 is explained as the result of employers diffculty of distinguishing real from nominal shocks i introduction the high unemployment of the 1930s continues to engage the imaginations of economists and economic historians although a large and impressive literature now covers most aspects of the great depression few studies discuss geographic variations 1 variations in unemployment across cities are nonetheless of interest the cross sectional variation in unemployment makes it possible to study the effect of industrial diversity on unemployment industrial diversity is the evenness with which employment is distributed across industries within a city suppose that a nation s employment is divided into say twenty industries a city is defined to be perfectly specialized when all employment is concentrated in a single industry and perfectly diversified when each of the twenty industries employs an equal share of the city s labor force recent empirical work by simon 1988 and diamond and simon 1990 shows that during the late 1970s and early 1980s cities with more diversified employment opportunities experienced lower rates of unemployment the results from the 1970s and 1980s raised the possibility that some part of the extremely high unemployment of the 1930s could be explained by the low degree of industrial diversity in many american cities indeed in the 1930s articles by mclaughlin 1930 and tress 1938 suggested the possibility of an inverse relationship between diversity and unemployment 2 we tested the relationship between unemployment and industrial diversity at the onset of the great depression in 1930 and 1931 we found much to our surprise that industrially more diverse cities experienced higher rates of unemployment in 1931 the surprising effect of employment diversity on unemployment in 1931 led us to speculate that the effects of diversity might differ under different macroeconomic conditions specifically we hypothesize that industrial diversity has two effects industrial diversity normally reduces unemployment through what we call a portfolio effect we argue that the anomalous effects of diversity on unemployment at the onset of the depression could have resulted if diversity of employment opportunities slowed essential wage adjustments required as a result of the massive decline in aggregate demand during normal periods the portfolio effect dominates and diversity reduces unemployment the magnitude of the great depression could have caused the wageadjustment effect to dwarf the portfolio effect thus reversing the normally inverse relationship between diversity and unemployment ii diversity and unemployment the portfolio effect the risk reducing property of diversity is well known to economists conroy 1975 first applied portfolio analysis to local labor markets simon 1988 developed a simple heuristic theory of the portfolio effect of industrial diversity imagine a multi industry world where only real shocks affect the demand price of firms all output is assumed to be sold in the national market the real shocks are assumed to be equivalent to observations on a random variable with zero mean independently and identically distributed across industries the shocks may be temporary or permanent although the distribution of shocks is known the duration of any particular shock is not

crude oil and stock markets stability instability and bubbles abstract we analyze the long run relationship between the world price of crude oil and international stock markets over 1971 1 2008 3 using a cointegrated vector error correction model with additional regressors allowing for endogenously identified breaks in the cointegrating and error correction matrices we find evidence for breaks after 1980 5 1988 1 and 1999 9 there is a clear long run relationship between these series for six oecd countries for 1971 1 1980 5 and 1988 2 1999 9 suggesting that stock market indices respond negatively to increases in the oil price in the long run during 1980 6 1988 1 we find relationships that are not statistically significantly different from either zero or from the relationships of the previous period the expected negative long run relationship appears to disintegrate after 1999 9 this finding supports a conjecture of change in the relationship between real oil price and real stock prices in the last decade compared to earlier years which may suggest the presence of several stock market bubbles and or oil price bubbles since the turn of the century

is hospital competition socially wasteful we study the consequences of hospital competition for medicare beneficiaries heart attack care from 1985 to 1994 we examine how relatively exogenous determinants of hospital choice such as travel distances influence the competitiveness of hospital markets and how hospital competition interacts with the influence of managed care organizations to affect the key determinants of social welfare expenditures on treatment and patient health outcomes in the 1980s the welfare effects of competition were ambiguous but in the 1990s competition unambiguously improves social welfare increasing hmo enrollment over the sample period partially explains the dramatic change in the impact of hospital competition

frictional unemployment and the role of industrial diversity since many individuals are immobile between city labor markets in the short run the industrial structure of cities plays an important role in determining the national rate of unemployment this paper argues that a city s frictional unemployment rate will be lower the more industrially diversified is the city that is the more evenly distributed is employment across industries the empirical work on 91 large smsas strongly supports the hypothesis the difference in frictional unemployment rates between the twenty most and least diverse cities is estimated at about 2 4 percentage points

the fisher hypothesis under different monetary regimes we examine the relation between inflation and nominal interest rates under the various monetary regimes in effect in the united states since the turn of the century our data include a newly constructed time series of short term municipal bond yields observed annually since 1902 the results generally support the hypothesis that after tax nominal yields adjust point for point with rationally forecasted inflation for the postwar years but strongly reject that hypothesis for the preceding years we suggest and offer supporting evidence that the difference between the two subperiods may be attributable to differences in the optimal forecasting technique for each era when forecasting is a costly endeavor

exogenous oil supply shocks how big are they and how much do they matter for the u s economy abstract the paper proposes a new measure of exogenous oil supply shocks the timing the magnitude and the sign of this measure may differ greatly from current state of the art estimates it is shown that only a small fraction of the observed oil price increases during oil crisis periods can be attributed to exogenous oil production disruptions exogenous oil supply shocks cause a sharp drop of u s real gdp growth after five quarters rather than an immediate and sustained reduction in economic growth and a spike in cpi inflation after three quarters overall exogenous oil supply shocks made remarkably little difference for the evolution of the u s economy since the 1970s although they did matter for some historical episodes

on the climate change effects of high oil prices some commentators claim that the oil market has achieved within a few months what international bureaucrats have struggled to obtain in a decade of international climate negotiations the fallacy of the oil price argument is that substitutions and income effects that would result from higher oil prices are not considered using a computable general equilibrium model we show that high oil prices cannot serve as substitutes for effective climate policies

assessing the impact of us ethanol on fossil fuel markets a structural var approach abstract despite the growing importance of biofuels the effect of biofuels on fossil fuel markets is not fully understood we develop a joint structural vector auto regression var model of the global crude oil us gasoline and us ethanol markets to examine whether the us ethanol market has had any impact on global oil markets the structural var approach provides a unique method for decomposing price and quantity data into demand and supply shocks allowing us to estimate the distinct dynamic effects of ethanol demand and supply shocks on the real prices of crude oil and us gasoline ethanol demand in the us is driven mainly by government support in the form of tax credits and blending mandates shocks to ethanol demand therefore reflect changes in policy more than any other factor in contrast ethanol supply shocks are driven by changes in feedstock prices a principle finding is that a policy driven ethanol demand expansion causes a statistically significant decline in real crude oil prices while an ethanol supply expansion does not have a statistically significant impact on real oil prices this suggests that even though us ethanol market is small the influence of us biofuels policy on the crude oil market is pervasive we also show that ethanol demand shocks are more important than ethanol supply shocks in explaining the fluctuation of real prices of crude oil and us gasoline

common cycles and common trends in the stock and oil markets evidence from more than 150 years of data abstract this paper investigates the role of permanent and transitory shocks within the framework of common cycles and common trends in explaining stock and oil prices we perform a multivariate variance decomposition analysis of monthly data on the west texas intermediate wti oil price and the s p 500 the dataset used in the study spans a long period of 150 years and therefore contains a rich history to examine both the short and long run comovement properties of oil and stock prices given that the oil and stock markets might comove both in the short and long run it is of interest to see the relative impacts of transitory and permanent shocks on both variables we find that log oil price and log s p 500 share a common stochastic trend for our full sample of september 1859 to july 2015 but a common cycle only exists during the post ww ii period full and post ww ii samples have quite different common feature estimates in terms of the impact of permanent and transitory shocks as measured by the impulse responses and forecast error variance decompositions we also find that in the short run oil is driven mostly by cycles transitory shocks and stock market is mostly driven by permanent shocks but permanent shocks dominate in the long run

the nature of oil shocks and the global economy abstract this paper identifies the main driving force behind oil price shocks in 1970 2006 by applying a simple identification strategy of supply driven and demand driven price shocks the identification hypothesis states that supply driven oil price shocks have a negative impact on the macroeconomic activity of countries which are net consumers of oil while demand driven oil price shocks do not have negative effects in order to identify global demand driven shocks a weighted aggregate gdp series of countries which are net consumers of oil is constructed over 1970 2006 the key result is that the main driving force behind oil price shocks has changed from supply driven shocks in 1970 1992 to demand driven shocks in 1992 2006

contagious energy prices we develop an empirical model of the determinants of end use energy prices in 28 organisation for economic co operation and development countries for this we construct a unique panel data set and formulate a spatial panel econometric model with fixed country effects for the period of 1980 2009 a special feature of the proposed empirical model is that cross country interdependence in energy prices surfaces through two channels a metric of similarity towards energy policy and a metric of trade in energy goods we estimate the parameters of that model and conduct several comparative static experiments we find that higher income per capita and lower efficiency in energy distribution tend to raise energy prices whereas higher net imports of energy and more abundant energy resource endowments reduce them we also find that bilateral trade in energy goods is an important channel of transmission of shocks in energy prices across countries the estimation results suggest that countries that use the same types of resources to generate energy are likely to transmit energy price shocks to each other through competition effects

monetary policy response to oil price shocks how should monetary authorities react to an oil price shock this paper shows that in a noncompetitive economy policies that perfectly stabilize prices entail large welfare costs hence explaining the reluctance of policymakers to enforce them the policy trade off is nontrivial because oil energy is an input to both production and consumption as welfare maximizing policies are hard to implement and communicate i derive a simple interest rate rule that depends only on observables but mimics the optimal plan in all dimensions the optimal rule is hard on core inflation but accommodates oil price changes

monetary policy uncertainty and the market reaction to macroeconomic news abstract we examine whether monetary policy uncertainty influences the reaction of the equity treasury security foreign exchange and crude oil markets as well as medium term interest rates to u s macroeconomic announcements using intraday futures data we show that in the presence of higher policy uncertainty the response to macroeconomic news weakens in the stock and crude oil markets and strengthens in the treasury interest rate and foreign exchange markets in times of elevated monetary policy uncertainty macroeconomic announcements impact the financial and crude oil markets to a large extent through expectations of future monetary policy

healthy business managerial education and management in healthcare we investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries we find that hosp

the employment and wage effects of oil price changes a sectoral analysis in this paper we use micro panel data to examine the effects of oil price changes on employment and real wages at the aggregate and industry levels we also measure differences in the employment and wage responses for workers differentiated on the basis of skill level we find that oil price increases result in a substantial decline in real wages for all workers but raise the relative wage of skilled workers the use of panel data econometric techniques to control for unobserved heterogeneity is essential to uncover this result which is completely hidden in ols estimates while the short run effect of an oil price increase on aggregate employment is negative the long run effect is in fact positive we find that changes in oil prices induce changes in employment shares and relative wages across industries however we find little evidence that oil price changes cause labor to consistently flow into those sectors with relative wage increases copyright 1996 by mit press

monetary factors in the great depression this paper examines the role of monetary policy in the early stages of the great depression and considers the mechanism whereby this policy may have affected real activity i conclude that the depression was preceded by a dramatic shift towards a highly contractionary monetary policy the economic impact of this policy seems unlikely to have come through the conventional keynesian channels of a shortage of liquidity and high ex ante real interest rates but instead may have operated through unanticipated deflation and after 1930 through the disruption of financial intermediation as a consequence of the banking panics

testing the efficiency of the futures market for crude oil in the presence of a structural break the efficiency of the futures market for crude oil has been the subject of significant study with the basis regression representing a popular methodology however the parameters of this model are subject to a structural break casting doubt on any conclusion regarding the efficiency of the futures market to address this problem this article employs a simple generalization which is capable of testing the efficiency of a futures market in the presence of a structural break using this approach strong evidence of inefficiency is found in the one month futures contract for west texas intermediate for the period between 1985 and 2013 which is otherwise not detected

real business cycle models past present and future in this paper i review the contribution of real business cycles models to our understanding of economic fluctuations and discuss open issues in business cycle research this abstract was borrowed from another version of this item

assessing the u s oil security premium abstract world oil supply disruptions lead to u s economic losses increased oil consumption increases the vulnerability of the economy to oil supply disruptions but it matters where the additional oil is produced increased production from stable producers can dampen future oil price shocks whereas increased production from unstable producers can exacerbate future oil price shocks because oil is fungible u s pricing and import policies can differentiate only between domestic and imported oil rather than between stable and unstable sources the economic losses associated with oil supply disruptions gdp losses and some transfers abroad are externalities that can be quantified as oil security premiums we estimate these premiums by taking into account projected world oil market conditions probable oil supply disruptions the market response to oil supply disruptions and the resulting u s economic losses

energy price uncertainty energy intensity and firm investment this paper examines the effect of energy price uncertainty on firm level investment an error correction model of capital stock adjustment is estimated with data on u s manufacturing firms higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth the result is robust to consideration of energy intensity by industry the effect is greater for high growth firms it must be emphasized that the direct effect of uncertainty is not estimated conditional variance of energy price is obtained from a garch model findings suggest that stability in energy prices would be conducive to greater stability in firm level investment

the productivity slowdown the oil shocks and the real cycle f ive facts stand out about economic performance in the united states since world war ii the first is that for most of the postwar period the u s has had a slower rate of economic growth than the other major developed democracies except great britain and much lower rates of growth than germany japan and italy the gap between the growth of per capita income of the united states and comparable countries has however tended to diminish over time and the united states has lately grown at about the same rate as most other developed countries the second outstanding fact is that the united states has fallen far behind in many mass production industries in which it used to lead the world whereas it is ahead of other nations in many new and especially high technology industries in automobiles steel tires household appliances and earth moving and farm equipment for example u s production has fallen dramatically in relation to output in most comparable countries and the country has become a net importer of most such products by contrast in newer industries such as computers jet aircraft sophisticated weaponry and high technology in general the united states is often dominant both as producer and exporter the third outstanding fact is that most of the older heartland of american industry roughly the area north and east of an arc drawn from baltimore to st louis to milwaukee has declined dramatically in comparison with the south and the west this change in regional fortunes has been due in large part to migration motivated by differences in economic prospects from the declining to the advancing

sources of geographic variation in health care evidence from patient migration we study the drivers of geographic variation in us health care utilization using an empirical strategy that exploits migration of medicare patients to separate the role of demand and supply factors our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics within our sample of over 65 medicare beneficiaries we find that 40 50 percent of geographic variation in utilization is attributable to demand side factors including health and preferences with the remainder due to place specific supply factors jel h51 i1 i11