some empirical evidence on the effects of shocks to monetary policy on exchange rates this paper investigates the effects of shocks to u s monetary policy on exchange rates we consider three measures of these shocks orthogonalized shocks to the federal funds rate orthogonalized shocks to the ratio of nonborrowed to total reserves and changes in the romer and romer index of monetary policy in sharp contrast to the literature we find substantial evidence of a link between monetary policy and exchange rates specifically according to our results a contractionary shock to u s monetary policy leads to i persistent significant appreciations in u s nominal and real exchange rates and ii significant persistent deviations from uncovered interest rate parity in favor of u s interest rates

how do daily changes in oil prices affect us monthly industrial output detecting asymmetry has become increasingly difficult using single frequency data this paper goes beyond the prevailing use of aggregate averaged data in order to provide a more in depth treatment of the dynamic effects of the price of crude oil on industrial output growth to do so we propose an asymmetric mixed data sampling amidas model to examine if there is any concealed evidence of asymmetry arising from daily effects of the price of crude oil on monthly changes in industrial output in the united states us we find that this model is able to detect dynamic asymmetric impacts of a high frequency independent variable on a low frequency dependent variable more effectively than when the high frequency variable is aggregated up at the time interval of the low frequency variable we find that in comparison with the marginal lagged effects of a rise in the daily price of crude oil the effects of a fall in the daily price of crude oil are more sluggish as it takes longer for the effects of the oil price drop to die off over time this finding implies that a fall in the price of crude oil shifts the supply curve rightward less and at a much slower pace than an equivalent price rise shifts it to the left

estimating the effect of campaign spending on senate election outcomes using instrumental variables o examine the traditional view that challenger spending is more effective than incumbent spending 7 i reestimate the effects of spending using instrumental variables that affect a candidate s ability to raise campaign funds such as candidate wealth levels hhen the endogeneity of candidate spending levels is properly taken into account the marginal effects of incumbent and challenger spending are roughly equal in contrast to previous research showing that because of higher marginal returns to challenger spending the incumbent s spending advantage cannot explain high incumbent reelection rates this article shows that in an average senate election the incumbent s spending advantage yields a 6 increase in the incumbent s vote share that incumbent spending wins elections has direct implications regarding the consequences of campaign finance reform my findings imply that equalizing spending levels may significantly increase incumbent defeat rates and caps on candidate spending may improve the chances of challengers in american congressional elections incumbents routinely win reelection even in the 1994 republican landslide change in the partisan makeup of congress occurred mainly through open seats switching from the democrats to the republicans a common explanation for high congressional reelection rates is the large campaign spending advantage enjoyed by incumbents it is widely believed that challenger spending is very important but there is surprisingly little evidence in the academic literature that incumbent campaign spending has an important effect on congressional election outcomes in light of the substantial effort incumbents devote to fundraising as well as some nagging methodological questions about existing academic studies the effect of incumbent spending on election outcomes remains an unresolved issue accurately measuring how incumbent spending leads to votes is of obvious importance politicians want to win elections and so if money matters then this will influence their behavior if campaign spending effects are trivial then concerns about politicians being

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

election goals and the allocation of campaign resources this paper compares the equilibrium behavior and outcomes in a model of two party competition for legislative seats under two different assumptions about the parties goals 1 parties maximize the expected number of seats won and 2 parties maximize the probability of winning a majority of the seats the two goals may lead to qualitatively different behavior and studying the differences yields insights into the relationship between the goals and the role of assymetries between the parties

agricultural revolution and elite reproduction in qing china the transition to capitalism debate revisited recent actor centric theory about the historical rise of capitalism emphasizes the role of the autonomous agrarian elite in fostering a sustained agricultural revolution this revolution generated ample agrarian surplus in the form of rural elite s elevated income to fuel a capitalist industrial takeoff in late eighteenth century england the nontransition to capitalism in eighteenth and nineteenth century china despite the vast surplus generated in its advanced agrarian sector shows that high agricultural productivity is a necessary but not sufficient condition for a capitalist takeoff by comparing qing china with eighteenth century england where capitalist industrialization erupted spontaneously and nineteenth century japan where capitalist industrialization succeeded under intensive state sponsorship this article argues that a strong urban entrepreneurial elite capable of centralizing the agrarian surplus and investing it in productive industrial innovation were as important as the existence of the surplus itself in fomenting capitalist transition the reproduction of the elite in eighteenth century china was constrained not by the anticommercial oriental despotic state as presumed in earlier literature but by the state s paternalist disposition in managing urban class conflict capitalist industrial development in china was further impeded in the nineteenth century when a nexus of local predatory military elite emerged in response to millenarian uprisings and wasted most of the agrarian surplus in their accumulation of means of violence the negative case of china helps us advance the actor centric model of capitalist transition by bringing urban entrepreneurs and class politics back in

oil price shocks and their short and long term effects on the chinese economy a considerable body of economic literature shows the adverse economic impacts of oil price shocks for the developed economies however there has been a lack of empirical study of this kind on china and other developing countries this paper attempts to fill this gap by answering how and to what extent oil price shocks impact china s economy emphasizing on the price transmission mechanisms to that end we develop a structural vector auto regressive model our results show that an oil price increase negatively affects output and investment but positively affects inflation rate and interest rate however with the differentiated price control policies for materials and intermediates on the one hand and final products on the other hand in china the impact on real economy represented by real output and real investment lasts much longer than that to price monetary variables our decomposition results also show that the short term impact namely output decrease induced by the cut of capacity utilization rate is greater in the first one to two years but the portion of the long term impact defined as the impact realized through an investment change increases steadily and exceeds that of short term impact at the end of the second year afterwards the long term impact dominates and maintains for quite some time

the dynamics pattern of price dispersion in retail fuel markets abstract this paper empirically investigates the dynamics of price dispersion in retail fuel markets as a response to the corresponding wholesale price changes for this purpose we take advantage of a daily dataset of prices fixed by gas stations in two spanish regions it is consistently found that retail price dispersion is temporarily enlarged as a consequence of wholesale price increases while it is reduced due to decreases the presence of asymmetries in the short run dynamics is also revealed the impact of positive changes in the wholesale price is in the first days of adjustment clearly greater the dynamics pattern could be explained at least in part by the faster response of prices in the stations associated with the two vertically integrated companies that have the largest market share i e repsol and cepsa

relative energy price and investment by european firms abstract a dynamic model of investment is estimated with data on non financial firms in 15 european countries across 25 industries over 1991 2006 a rise in real energy price reduces the degree of persistence in the investment adjustment cost function panel results suggest that in manufacturing a 1 rise in real energy price reduces investment by a country s firms by 1 9 relative to that by firms in other countries with a smaller effect for non manufacturing firms the negative effect of a higher relative price of energy on firm level investment is significantly less marked the larger the firm results imply that stabilizing the relative price of energy would steady firm investment with greater gains in stability at smaller and medium sized firms results are robust to consideration of country business cycle effect and firm leverage estimation of investment is based on the euler equation approach with over 21 000 observations individual country regressions imply that a rise in the relative price of energy price has a statistically significant negative effect on firm level investment in 14 out of 15 countries to avoid dynamic panel bias estimation is by generalized method of moments with instrumental variables

the impact of oil price shocks on the term structure of interest rates in a structural var framework we study the impact of oil price shocks in the global crude oil market on the dynamics of the entire yield curve in four industrialised countries with different positions on the oil market the us canada norway and south korea responses of the term structure factors to oil market shocks are shown to differ contingent on the underlying sources that drive oil price shocks and the country s dependence on oil oil market specific demand shocks result in increases in the level factor in oil importing countries but have no such effect in oil exporting countries oil supply disruptions have short lived negative responses of the slope factors in the us and canada associated with loosening monetary policy whilst demand side shocks tend to lead to increases the slope in all countries overall oil supply and demand shocks jointly account for a considerable amount of the observed variation in the term structure of interest rates

oil prices inflation and interest rates in a structural cointegrated var model for the g 7 countries sharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries moreover the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries in this paper a structural cointegrated var model has been considered for the g 7 countries in order to study the direct effects of oil price shocks on output and prices and the reaction of monetary variables to external shocks our results can be summarized as follows i a stationary money demand as suggested by the classic theory of money can be identified for most countries ii according to the estimated coefficients of the structural part of the model for all countries except japan and u k the null hypothesis of an influence of oil prices on the inflation rate cannot be rejected inflation rate shocks are transmitted to the real economy by increasing interest rates iii impulse response analysis suggests for most countries the existence of an instantaneous temporary effect of oil price innovations on prices iv impulse response functions indicate different monetary policy reactions to inflationary and growth shocks v the simulation exercises directed to estimate the total impact of the 1990 oil price shock indicate that for some countries u s a significant part of the effects of the oil price shock is due to the monetary policy reaction function for other countries canada france and italy however the total impact is offset at least in part by an easing of monetary conditions

political advertising and election results we study the persuasive effects of political advertising our empirical strategy exploits fcc regulations that result in plausibly exogenous variation in the number of impressions across the borders of neighboring counties applying this approach to detailed data on television advertisement broadcasts and viewership patterns during the 2004 12 presidential campaigns our results indicate that total political advertising has almost no impact on aggregate turnout by contrast we find a positive and economically meaningful effect of advertising on candidates vote shares taken at face value our estimates imply that a one standard deviation increase in the partisan difference in advertising raises the partisan difference in vote shares by about 0 5 percentage points evidence from a regression discontinuity design suggests that advertising affects election results by altering the partisan composition of the electorate

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

oil price shocks and real gdp growth empirical evidence for some oecd countries this study assesses empirically the effects of oil price shocks on the real economic activity of the main industrialized countries multivariate var analysis is carried out using both linear and non linear models the latter category includes three approaches employed in the literature namely the asymmetric scaled and net specifications evidence of a non linear impact of oil prices on real gdp is found in particular oil price increases are found to have an impact on gdp growth of a larger magnitude than that of oil price declines with the latter being statistically insignificant in most cases among oil importing countries oil price increases are found to have a negative impact on economic activity in all cases but japan moreover the effect of oil shocks on gdp growth differs between the two oil exporting countries in the sample with the uk being negatively affected by an oil price increase and norway benefiting from it

real exchange rates and inflation in exchange rate based stabilizations an empirical examination abstract numerous explanations have been advanced for why real exchange rates typically appreciate after the nominal exchange rate is stabilized but few of them have been directly tested this paper uses an error correction model of mexican inflation to decompose the real appreciation of the peso during 1988 1994 into that part attributable to the peso s initial undervaluation that part explained by growing domestic demand and that part attributable to backward looking inflation the results indicate that the effects of backward looking inflation were highly transitory but that both the expansion of domestic demand and the initial undervaluation of the peso were important in boosting domestic prices and hence appreciating the real exchange rate

geometric brownian motion and structural breaks in oil prices a quantitative analysis the purpose of this paper is to present a quantitative analyses of oil price s path we try to argue that despite its parsimony and simplicity geometric brownian motion can perform well as a proxy for the movement of oil prices and for a state variable to evaluate oil deposits we base our argument on evidences of very low speed of mean reverting or long half life since unit root tests only can reject its null hypothesis in a sample longer than 100 years on the other hand we reject the null hypothesis of unit root with two endogenous breaks showing that the usual rejection can be attributed to omitted structural breaks we conclude that the average half life of oil price between 4 and 8 years depending on the model chosen is long enough to allow a good approximation as a geometric brownian motion

on the dynamic effects of oil price shocks a study using industry level data abstract this paper analyzes the effects of oil price shocks on demand and supply in various industries the impulse responses of identified var models indicate that for industries that have a large cost share of oil such as petroleum refinery and industrial chemicals oil price shocks mainly reduce supply in contrast for many other industries with the automobile industry being a particularly important example oil price shocks mainly reduce demand the paper suggests that oil price shocks influence economic activities beyond that explained by direct input cost effects possibly by delaying purchasing decisions of durable goods

renewable energy oil prices and economic activity a granger causality in quantiles analysis this paper analyzes the causal relationship between renewable energy consumption oil prices and economic activity in the united states from july 1989 to july 2016 considering all quantiles of the distribution although the concept of granger causality is defined for the conditional distribution the majority of papers have tested granger causality using conditional mean regression models in which the causal relations are linear we apply a granger causality in quantiles analysis that evaluates causal relations in each quantile of the distribution under this approach we can discriminate between causality affecting the median and the tails of the conditional distribution we find evidence of bi directional causality between changes in renewable energy consumption and economic growth at the lowest tail of the distribution besides changes in renewable energy consumption lead economic growth at the highest tail of the distribution our results also support the unidirectional causality from fluctuations in oil prices to economic growth at the extreme quantiles of the distribution finally we find evidence of lower tail dependence from changes in oil prices to changes in renewable energy consumption our findings call for government policies aimed at developing renewable energy markets to increase energy efficiency in the u s

do oil price shocks matter evidence for some european countries this paper analyzes the oil price macroeconomy relationship by means of analyzing the impact of oil prices on inflation and industrial production indexes for many european countries using quarterly data for the period 1960 1999 first we test for cointegration allowing for structural breaks among the variables second and in order to account for the possible non linear relationships we use different transformation of oil price data the main results suggest that oil prices have permanent effects on inflation and short run but asymmetric effects on production growth rates furthermore significant differences are found among the responses of the countries to these shocks

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

crude oil and the macroeconomy tests of some popular notions a note perhaps no other economic events in the post world war ii era have generated as much attention as the series of crude oil price shocks that have jolted the world economy since the opec boycott of 1973 a tremendous amount of space in the popular and professional literature has been devoted to analyzing the impacts of these shocks on the developed economies and the adjustments these shocks have induced one residual of this literature has been a general impression that since 1973 the functional relationship between crude oil prices and the developed macroeconomies has been dramatically and fundamentally altered yet to our knowledge no one has formally tested this impression recent evidence of hamilton 1983 suggests that crude oil prices had a strong impact on the u s business cycle well before 1973 further while textbook treatments of oil price shocks tend to highlight cost push inflationary effects the research of berndt and wood 1975 1979 and wilcox 1983 indicates the net complementarity between energy and capital in the u s economy is quite strong both before and after 1973 thus oil price shocks may have stronger real effects than generally believed in this paper we formally test three popular notions associated with the so called

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

forecasting the conditional volatility of oil spot and futures prices with structural breaks and long memory models this paper extends previous studies by investigating the relevance of structural breaks and long memory in modeling and forecasting the conditional volatility of oil spot and futures prices using a variety of garch type models our results can be summarized as follows first we provide evidence of parameter instability in five out of nine garch based conditional volatility processes for energy prices second long memory is effectively present in all the series considered and a figarch model seems to better fit the data but the degree of volatility persistence diminishes significantly after adjusting for structural breaks finally the out of sample analysis shows that volatility models accommodating instability and long memory characteristics of the data provide the best volatility forecasts for most cases

campaign spending with office seeking politicians rational voters and multiple lobbies abstract i introduce a microfounded model of campaign finance with office seeking politicians a continuum of voters and a large number of heterogeneous lobbies lobbies make contributions to politicians according to a common agency framework politicians use contributions to finance their electoral expenditures voters are not fooled by electoral expenditures they are influenced in a way that is consistent with the equilibrium behavior of lobbies and politicians the model is used to i determine the relation between campaign spending and the deviation from the median voter s preferred policy ii show the informational value of lobbies contributions iii evaluate the welfare implications of restricting campaign spending and iv interpret the empirical finding that campaign expenditures have a very low effect on election outcome although in equilibrium advertising provides voters with useful information under reasonable parameter values a ban on campaign contributions makes the median voter better off journal of economic literature classification numbers d72 d82 m37

asymmetric and nonlinear pass through of crude oil prices to gasoline and natural gas prices in this article we use the recently developed nonlinear autoregressive distributedlags nardl model to examine the pass through of crude oil prices into gasoline and natural gas prices our approach allowsus to simultaneously test the short and long run nonlinearities through positive and negative partial sum decompositions of the predetermined explanatory variables it also offers the possibility to quantify the respective responses of gasoline and natural gas prices to positive and negative oil price shocks from the asymmetric dynamic multipliers the obtained results indicate that oil prices affect gasoline prices and natural gas prices in an asymmetric and nonlinear manner but the price transmission mechanism is not the same important policy implications can be learned from the empirical findings

an asian route to capitalism religious economy and the origins of self transforming growth in japan modern capitalism is a self transforming dynamic that proliferates market niches new products and techniques the industrial revolution could take place only in the context of preexisting agricultural capitalism that in turn required a breakout from the obstacles constituted by agrarian coercive societies organizational conditions necessary for self sustaining capitalist growth included markets not only for commodities but for all factors of production land labor and capital combined under control of entrepreneurs motivated by an economic ethic of future oriented calculation and investment weber was mistaken in holding that the capitalist breakthrough occurred only in christian europe the author proposes a neo weberian model in which the initial breakout from agrarian coercive obstacles took place within the enclave of religious organizations with monasteries acting as the first entrepreneurs the model is illustrated by the case of buddhism in late medieval japan the leading sector of monastic capitalism spread into the surrounding economy through religious movements of mass proselytization which narrowed the gap between clergy and laity confiscation of buddhist property at the transition to the tokugawa period transferred the capitalist dynamic to the secular economy of an agricultural mass market opening the way for a distinctive japanese path through the industrial revolution

the asymmetry of the impact of oil price shocks on economic activities an application of the multivariate threshold model this paper applies the multivariate threshold model to investigate the impacts of an oil price change and its volatility on economic activities changes in industrial production and real stock returns the statistical test on the existence of a threshold effect indicates that a threshold value does exist using monthly data of the us canada and japan during the period from 1970 to 2002 we conclude i the optimal threshold level seems to vary according to how an economy depends on imported oil and the attitude towards adopting energy saving technology ii an oil price change or its volatility has a limited impact on the economies if the change is below the threshold levels iii if the change is above threshold levels it appears that the change in oil price better explains macroeconomic variables than the volatility of the oil price and iv if the change is above threshold levels a change in oil price or its volatility explains the model better than the real interest rate

dynamic jumps in global oil price and its impacts on china s bulk commodities abstract this paper investigated the impacts of oil price shocks especially dynamic jumps in its returns on china s bulk commodity markets at both the aggregate and industry levels after setting a zero lower bound to the jump intensity of the arji model we found that dynamic jumps exist in oil price movements moreover under shocks of oil price jumps not only the returns but also the risks of china s bulk commodity markets are affected significantly and the reactions of risks are characterized by overreactions meanwhile by decomposing oil price shocks into expected positive negative and unexpected positive negative components we discovered that the impacts of unexpected shocks are positive and significantly asymmetric at both levels while those of the expected shocks are negative and insignificantly asymmetric at the industry level in addition the volatility clustering of all price movements and the permanent volatility effects on china s bulk commodities are also authenticated by applying the garch family models

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

price of oil and world inflation and recession new evidence shows that the commonly held assumption that the 1973 74 oil price increase directly affected us and world inflation and subsequent recession is consistent with the empirical data an extended lucas varro real income equation applied to the us united kingdom canada france germany italy japan and the netherlands gives mixed results partly because of price control and decontrol programs simulation experiments on the price control variable using us data finds strong effects further studies can be made when consistent international data is available for the 1979 80 period 18 references 4 figures 3 tables dck

dynamic spillovers of oil price shocks and economic policy uncertainty this study examines the dynamic relationship between changes in oil prices and the economic policy uncertainty index for a sample of both net oil exporting and net oil importing countries over the period 1997 01 2013 06 to achieve that an extension of the diebold and yilmaz 2009 2012 dynamic spillover index based on structural decomposition is employed the results reveal that economic policy uncertainty oil price shocks responds negatively to aggregate demand oil price shocks economic policy uncertainty shocks furthermore during the great recession of 2007 2009 total spillovers increase considerably reaching unprecedented heights moreover in net terms economic policy uncertainty becomes the dominant transmitter of shocks between 1997 and 2009 while in the post 2009 period there is a significant role for supply side and oil specific demand shocks as net transmitters of spillover effects these results are important for policy makers as well as investors interested in the oil market

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

wavelet decomposition and regime shifts assessing the effects of crude oil shocks on stock market returns while there is a large body of empirical studies on the relationship between crude oil price changes and stock market returns they have failed to achieve a consensus on this subject in this paper we combine wavelet analysis and markov switching vector autoregressive ms var approach to explore the impact of the crude oil co shocks on the stock market returns for uk france and japan over the period from january 1989 to december 2007 our procedure involves the estimation of the extended ms var model in order to investigate the importance of the resultant wavelet filtering series after removing random components in determining the behavior of the stock market volatilities we show that co shocks do not affect the recession stock market phases except for japan however they significantly reduce moderate and or expansion stock market phases temporarily moreover this negative relationship appears to be more pronounced during the pre 1999 period the empirical findings will prove extremely useful to investors who need to understand the exact effect of international oil changes on certain stocks prices as well as for policy managers who need a more thorough evaluation about the efficiency of hedging policies affected by oil price changes

why is there so little money in u s politics in this paper we argue that campaign contributions are not a form of policy buying but are rather a form of political participation and consumption we summarize the data on campaign spending and show through our descriptive statistics and our econometric analysis that individuals not special interests are the main source of campaign contributions moreover we demonstrate that campaign giving is a normal good dependent upon income and campaign contributions as a percent of gdp have not risen appreciably in over 100 years if anything they have probably fallen we then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators votes finally we illustrate that when one controls for unobserved constituent and legislator effects there is little relationship between money and legislator votes thus the question is not why there is so little money politics but rather why organized interests give at all we conclude by offering potential answers to this question this abstract was borrowed from another version of this item

what happened to the oil price macroeconomy relationship abstract strong evidence is found that oil prices no longer granger cause many u s macroeconomic indicator variables in data after 1973 a number of potential explanations are explored that sample stability issues are responsible that oil prices are now endogenous and that linear and symmetric specifications misrepresent the form of the oil price interaction none of these hypotheses are supported by the data the opec price increases do appear to have had significant impacts while the effects of the price declines of the 1980s are smaller and harder to characterize these results have potentially important implications for the large body of research which utilizes oil prices as an instrumental or explanatory variable

tight oil real wti prices and u s stock returns abstract following the adoption of new techniques of shale and fracking by u s oil companies a structural vector autoregression model svar complements studies on why brent and wti started to diverge around early 2011 using monthly data from 2000 to 2018 we decompose oil supply into world oil excluding u s u s conventional non tight oil and u s tight oil we examine the variance decomposition of stock returns for the aggregate market s p 500 the s p energy sector and chevron and exxon mobil oil companies and we further identify differences between two subsamples from 2000 to 2010 and 2011 to 2018 respectively we find that supply considerations especially due to tight oil become more important in the subsample after 2011 not only for individual oil companies but also for the aggregate market and energy sector supply shocks due to tight oil explain in our benchmark model between 29 s p 500 and 31 s p energy of the variance in stock returns after 24 months and between 28 and 29 for oil companies none of these are statistically significant in the pre 2011 subsample among impulse responses tight oil production responds positively to disruptions in world oil and u s stock returns respond positively to oil price shocks and respond negatively to tight oil shocks which is a further finding while being consistent with the literature copula modeling uncovers stronger tail dependences in the second subsample for the interactions during downturns and upturns among global demand crude oil prices and stock markets

elite self interest and economic decline in early modern europe why does the leading economic power of its time lose its dominance competing theories are tested through a comparison of four historical cases the florentine city state the spanish empire and the dutch and british nation states institutional context determined social actors capacities to apply their polities human and material resources to foreign economic competition specifically the dominant elites in each polity established the social relations and institutions that protected them from domestic challenges from rival elites and classes but these relations and institutions had the effect of limiting elites capacities to adapt to foreign economic rivals elites acting locally determined their capacities to act globally

money and votes a simultaneous equation model this paper has specified and estimated a model of the interaction between money and voting in american politics convincingly establishing the identification of a system of equations can be difficult even when theory provides a guide in the study of money in politics however no theoretical perspective has been established in the literature to make the case for identification as unambiguous as possible this paper has done two things first the specification was based in part on theory which has formally been developed elsewhere and which satisfactorily describes data at the economic interest group level welch 1980 second part of the question of identification revolves around the relationship between party strength and socioeconomic variables because there are questions as to the best measurement of party strength results based on two measures were presented for a number of reasons the presidential vote was the preferred measure this study draws four conclusions first money influenced voting in u s house elections in 1972 although its effect was small second patterns of total contributions to a u s house candidate are consistent with the hypothesis that a majority of dollars come from contributors who prefer to support likely winners third the total contributions made to a candidate are a positive function of the district s median years of schooling completed and the gini coefficient total contributions made to a democratic candidate are also a positive function of the median income finally had house campaigns been financed in the early 1970s even to the point of giving each major party candidate 150 000 in 1978 dollars few elections would have been changed it is also worth mentioning some of the things about the financing of political campaigns that we still do not know the above conclusions involve only elections to the u s house there are good reasons for suspecting that money is more influential in u s senate elections ols statistics support this belief and the greater visibility of those races help justify it although money has little effect on house elections we do not know whether contributions affect legislative voting in the house representatives apparently believe that expenditure influences their reelection chances given the complexity of the process it should be no surprise that this belief conflicts with our findings acting on this belief a representative s vote may very well be influenced by the sources of his contributions either directly or indirectly through the giving of access to contributors finally we should be reminded that the above model is static while the electoral process is dynamic the amount contributed to a candidate is affected by his probability of winning in the previous time period e g week month and in turn affects that probability in the following time period as usual what we know is overshadowed by what we do not know the above questions are both interesting in their own right and of interest to policy making

this is what happened to the oil price macroeconomy relationship abstract many of the quarterly oil price increases observed since 1985 are corrections to even bigger oil price decreases the previous quarter when one looks at the net increase in oil prices over the year recent data are consistent with the historical correlation between oil shocks and recessions

targeting the real exchange rate theory and evidence abstract this paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate an intertemporal optimizing model suggests that in the absence of changes in fiscal policy a more depreciated level of the real exchange rate can only be attained temporarily this can be achieved by means of higher inflation and or higher real interest rates depending on the degree of capital mobility evidence for brazil chile and colombia supports the model s prediction that undervalued real exchange rates are associated with higher inflation

the effects of oil prices on the price indices in taiwan international or domestic oil prices matter abstract this study employs the multivariate threshold model developed by tsay 1998 to examine the effects of international and domestic oil prices on the price indices in taiwan using monthly data from january 1999 to december 2011 the results show that changes in domestic oil prices do not granger cause changes in the price indices when the oil price change exceeds the threshold level however international oil price shocks still affect the wholesale price index through the effects of announcement and expectation therefore controlling domestic oil prices to prevent volatility in the price indices is ineffective if we focus on the period when the left wing party is in power we also find that changes in international oil prices have more critical effects on the price indices than changes in domestic oil prices however the lead lag relationship between changes in domestic oil prices and changes in the price indices vanishes except with respect to the transportation category where the consumer price index is affected by domestic oil prices this result may be due to the government s extensive intervention in setting oil prices

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

oil revenue shocks and government spending behavior in iran abstract oil revenues play an important role in the political economy of iran on average 60 of the iranian government revenues and 90 of export revenues originate from oil and gas resources current international sanctions on iran have mainly targeted the oil production capacity of iran and its exports to the global markets in this study we analyze the dynamic effects of oil shocks on different categories of the iranian government expenditures from 1959 to 2007 using impulse response functions irf and variance decomposition analysis vdc techniques the main results show that iran s military and security expenditures significantly respond to a shock in oil revenues or oil prices while social spending components do not show significant reactions to such shocks

using repeat challengers to estimate the effect of campaign spending on election outcomes in the u s house previous studies of congressional spending have typically found a large positive effect of challenger spending but little evidence for effects of incumbent spending those studies however do not adequately control for inherent differences in vote getting ability across candidates high quality challengers are likely to receive a high fraction of the vote and have high campaign expenditures even if campaign spending has no impact on election outcomes to avoid that bias this paper examines elections in which the same two candidates face one another on more than one occasion differencing eliminates the influence of any fixed candidate or district attributes estimates of the effects of challenger spending are an order of magnitude below those of previous studies campaign spending has an extremely small impact on election outcomes regardless of who does the spending campaign spending limits appear socially desirable but public financing of campaigns does not

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

impact of oil price shocks on output inflation and the real exchange rate evidence from selected asean countries this article analyses the impact of oil price shocks on real output inflation and the real exchange rate in thailand malaysia singapore the philippines and indonesia asean 5 using a structural var model the cointegration tests indicate that the macroeconomic variables of these countries are cointegrated and share common trends in the long run the impulse response functions reveal that oil price fluctuations do not impact the asean 5 economies in the long run and much of its effect is absorbed within five to six quarters the variance decomposition results further assert that with a few exceptions oil price shocks do not explain a significant variation in any of the variables under consideration we also identify a very unique pattern of response to oil price fluctuations between malaysia and singapore and between the philippines and thailand the pairs exhibit a high degree of similarity in their responses they do not share any commonalities across the group

historical sociology s puzzle of the missing transitions a case study of early modern japan prominent accounts of the transition to capitalism have a far too limited understanding of pre capitalist agrarian economies potential for dynamism recent research shows that conditions earlier accounts identify as triggers for a transition to capitalism could be present without a transition occurring i expand on implications of these cases of missing transitions for theorizing the dynamics of pre capitalist agrarian economies i present a theoretical framework that shows how phenomena previously associated with the transition to capitalism such as flexible property rights in land and labor extensive markets and accumulation of industrial and mercantile wealth emerged in pre capitalist societies without leading to capitalist development i illustrate the analytic upshot of this framework by considering the case study of japan in the tokugawa era 1603 to 1868 for historical sociologists early modern japan has long been seen as an anomalous case puzzlingly mixing developments thought to represen

the causes of spanish unemployment a structural var approach abstract in this paper we review the main causes of spanish unemployment and weight them by estimating a simple macroeconomic model using the structural var methodology by using this methodology we associate different causes of unemployment with shocks of different nature which have long lasting effects due to full hysteresis we claim that such an extreme assumption on state dependency is reasonable at least as a local approximation for the period and the economy at hand our results suggest that the combination of a plausible mixture of different types of shock and extreme persistence in their propagation mechanisms can satisfactorily explain the dismal performance of the spanish labour market during the last two decades

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

who monitors the monitor effect of party observers on electoral outcomes abstract we investigate whether electoral monitors who are in charge of assuring the fairness of elections interfere with their outcome more precisely does the monitors presence bias the results in favor of their own preferences to do so we construct a novel dataset from the raw voting records of the 2011 national elections in argentina we exploit a natural experiment to show that electoral observers cause on average a 1 5 increase in the vote count for the observers preferred party which can reach up to 6 for some parties this bias which appears under various electoral rules occurs mainly in municipalities with lower civic capital and weakens the accountability role of elections

time and frequency connectedness among oil shocks electricity and clean energy markets abstract this paper examines the time and frequency connectedness among electricity carbon and clean energy markets and oil price demand and supply shocks in doing so we use the spillover method proposed by diebold and yilmaz 2012 and its extension in the frequency domain by barunik and k ehlik 2018 we find increased connectedness during the global financial crisis as well as in the shale oil revolution period the total connectedness is also higher in the short run compared to the long run due to their low connectedness electricity futures can act as a risk diversifier and safe haven asset against oil shocks net pairwise directional connectedness among oil shocks and the clean energy index is higher during the shale oil revolution these results have important implications for investors with different investment time horizons

do higher oil prices push the stock market into bear territory this paper investigates whether a higher oil price pushes the stock market into bear territory by using time varying transition probability markov switching models it examines different measures of oil price shocks empirical evidence from monthly returns on the standard poor s s p 500 price index suggests that an increase in oil prices leads to a higher probability of a bear market emerging

oil price asymmetric effects answering the puzzle in international stock markets a bstract although studies have found an asymmetric pattern in the response of aggregate output to oil price changes parallel studies in stock markets have not been conclusive about their existence this paper finds evidence that effects for oil importing and oil exporting countries run in opposite directions oil price hikes have a negative effect on the stock markets of oil importing countries while the impact is positive for the stock markets of oil exporting countries statistical tests support the presence of asymmetric effects only in oil importing countries oil price volatility has a negative impact in stock markets of oil importing countries and positive in oil exporting countries moreover oil volatility seems to be affected asymmetrically by oil price changes oil price drops increase oil volatility more than oil price hikes do overall the evidence seems to support that falls in oil prices do not impact stock markets because their positive effects are offset by negative effects of oil price volatility canceling out effects for oil importing countries

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

estimation of direct and indirect impact of oil price on growth abstract using a new methodology this paper measures the direct and indirect effects of oil prices on gdp growth of 12 economies because of the indirect effect which is transmitted through a trade matrix even the net oil exporters like indonesia and malaysia cannot escape the negative influence of high oil prices

oil price fluctuation volatility spillover and the ghanaian equity market implication for portfolio management and hedging effectiveness abstract this study attempts to contribute to the literature on stock markets and energy prices by examining the dynamic volatility and volatility transmission between oil and ghanaian stock market returns in a multivariate setting using the recently developed var garch var agarch and dcc garch frameworks in turn the models results are used to compute and analyze the optimal weights and hedge ratios for oil stock portfolio holdings for comparison purposes and to put the paper more in the perspective of west africa the nigerian stock market is also included in the analysis our findings point to the existence of significant volatility spillover and interdependence between oil and the two stock market returns while spillover effects are stronger for nigeria the transmission of volatility is much more apparent from oil to stock than from stock to oil in the case of ghana also the study demonstrates evidence of short term predictability in oil and stock price changes through time and reveals that conditional volatility changes more rapidly as result of substantial effects of past volatility rather than past news shocks for all market returns moreover we show that there is a slightly more effective hedge in the two stock markets under the dcc garch framework our preferred model compared to the other two models although hedging effectiveness is much greater for ghana on the whole our findings for optimal hedge ratios are consistent with other studies and particularly the view that oil assets should be an integral part of a diversified portfolio of stocks and suggest that a better understanding of volatility links is crucial for portfolio management in the presence of oil price risk finally the existence of multivariate asymmetric effects and dynamic conditional correlations as revealed by the var agarch and dcc garch models make it clear that the assumptions of symmetric effects and constant conditional correlations are not supported empirically

the impact of campaign spending on votes in multiparty elections abstract the impact of candidate campaign spending on votes and abstention in multiparty elections is estimated from the specification of a structural model of voter behavior this model accounts for the endogeneity of campaign spending as well as the heterogeneity in voter preferences empirical results are estimated from aggregate actual election data the results demonstrate the importance of spending during the campaign period and voter heterogeneity with respect to these expenditures the own and cross expenditure vote share elasticity estimates reveal that political campaign spending not only redistributes voters across parties but also decreases the size of the abstaining group of the electorate

oil prices and exchange rates the quotations show a sharply divergent pattern in the response of the foreign exchange market to announcements of oil price increases during the first oil shock news about oil price rises led to a strengthening of the dollar whereas during the i979 surge of oil prices the reverse was generally true when the news was not so bad as feared the dollar fell back in i974 but rose in i979 in 1980 the pattern shifted once again back to dollar appreciation is there a rational fundamental explanation for the behaviour of the foreign exchange market or is it a matter of traders responding to what other traders arbitrarily think it is difficult to resolve this question but some insight can be provided through an analytical examination of the relationship between oil price increases and exchange rates the paper begins with a theoretical framework for analysing the relation between oil prices and exchange rates and then uses the theory to explain the behaviour of the foreign exchange market

economic impacts of higher oil and gas prices the role of international trade for germany the analysis concentrates on direct and indirect price increases induced shifts in international trade and structural changes in the oil importing economies the paper at hand asks whether a stabilizing effect via international trade and domestic structural change on the gdp of oil importing countries can be observed if a permanent oil price increase occurs at least for germany structural change from consumer goods to investment goods industry and an improvement of international competitiveness limit negative impacts of increased energy prices analysis is based on the extensive and disaggregated global ginfors model and the detailed inforge model for the german economy

interactive relationships between crude oil prices gold prices and the nt us dollar exchange rate a taiwan study this investigation examines the correlations of oil prices gold prices and the nt dollar versus u s dollar exchange rate during 2007 09 03 2011 12 28 johansen co integration test var model granger causality test impulse response analysis and variance decomposition method were used to clarify the interactive relationships among the three variables these tests and models show that the oil price gold price and exchange rate remain considerably independent from one another which implies policymakers should consider the separation of energy and financial policies

interdependence of oil prices and stock market indices a copula approach article i nfo article history in this paper we study the relationship between the oil price and stock market index of various countries between 1982 and 2007 we exclude oil and gas stock companies from the stock indices to remove the obvious direct linkage oil price series are converted into local currency to account for possible exchange rate effects the method of copula is used to model the general dependence between stock returns and oil price returns our findings suggest a weak dependence between oil prices and stock indices for most cases which are consistent with the results from previous studies exceptions are for the stock index returns of large oil consuming and producing countries united states and canada which are shown to have a relatively strong dependence with the oil price series the introduction of euro in 1999 altered considerably dependence between oil prices and stock returns

campaign advertising and voter welfare this paper investigates the role of campaign advertising and the opportunity of legal restrictions on it an electoral race is modeled as a signalling game with three classes of players many voters two candidates and one interest group the group has non verifiable insider information on the candidates quality and on the basis of this information offers a contribution to each candidate in exchange for a favorable policy position candidates spend the contributions they receive on non directly informative advertising this paper shows that 1 a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive 2 although voters are fully rational a ban on campaign advertising can be welfare improving and 3 split contributions may arise in equilibrium and if they arise too often they are detrimental to voters

a long run structural macroeconometric model of the uk a new modelling strategy that provides a practical approach to incorporating long run structural relationships suggested by economic theory in an otherwise unrestricted var model is applied to construct a small quarterly macroeconometric model of the uk estimated over 1965q1 1999q4 in nine variables domestic and foreign outputs prices and interest rates oil prices the nominal effective exchange rate and real money balances the aim is to develop a model with a transparent and theoretically coherent foundation tests of restrictions on the long run relations of the model are presented the dynamic properties of the model are discussed and monetary policy shocks identified

campaign advertising and election outcomes quasi natural experiment evidence from gubernatorial elections in brazil whether campaign advertising influences election outcomes is an open question a paradox given the amount spent on campaigning in general and tv advertising in particular we argue that such absence of documentation is due to the focus of the empirical literature on the u s where the allocation of campaign spending and advertising is decentralized we explore a quasi natural experiment that enables us to mitigate the omitted variables and reverse causality problems caused by decentralized allocation in brazil gubernatorial elections work in a two round system in the first round candidates tv time shares are determined by their coalitions share of seats in the national parliament in the second round tv time is split equally between the first round winner and runner up using differences between rounds as a source of variation we find a large causal effect of tv advertising on election outcomes

dynamic effects of rising oil prices on consumer energy prices in canada and the united states evidence from the last half a century abstract this paper examines the dynamic relationship between the price of crude oil and the cpi energy price sub index in canada and the u s using a markov regime switching model and the bai perron sequential method since these two series are cointegrated during the sample period january 1961 june 2013 a short run dynamic model is thus estimated for each country in which all coefficients and the error variance terms can freely switch over time between two values prevailing in regimes 0 and 1 previous studies indicate that the price of crude oil does not currently affect the aggregate cpi as much as it did in the 1970s this finding is not disputed in this paper however the sequentially determined break date as well as the time varying regime switching probabilities point to two new findings first the marginal effects of changes in oil price on consumer energy prices not the aggregate cpi have consistently increased and become more instantaneous for both countries after the western u s energy crisis of 2000 second the speed of adjustment proxied by different error correction coefficients has also risen particularly for the u s therefore oil prices exert far more positive and immediate impacts on energy costs in the post rather than pre 1999 periods

greed and contingency state fiscal crises and imperial failure in early modern europe1 why do states lose the capacity to finance the expansionist military policies economic development strategies or domestic spending initiatives they once supported the path dependent models offered by fiscal military rational choice and geopolitical theorists are evaluated in comparison with an elite conflict model of contingent historical change the latter model is found to be better able to explain territorial and fiscal stagnation and decline as well as imperial expansion in the cases of early modern spain france the netherlands and britain

does global liquidity drive commodity prices abstract this paper tackles the question of whether a cross sectional perspective on monetary policy is capable of explaining movements in global commodity prices in this vein we contribute to the rich literature on global liquidity in two different ways on the one hand to achieve a global series in terms of common monetary policy shocks we propose a distinction between common and idiosyncratic factors across economies as proposed by bai and ng 2004 our second innovation stems from the consideration of a markov switching vector error correction model when analyzing time varying short run dynamics having identified the long run structure which includes a proportional relationship between commodity prices and global liquidity in the first step our results indeed show that the impact of a global liquidity measure on different commodity prices is significant and varies over time one regime approximately accounts for times where commodity prices significantly adjust to disequilibria while the second regime is characterized by either a weak or no commodity price adjustment the fact that global liquidity also reacts to disequilibria in a specific regime demonstrates the two way causality between monetary policy and commodity prices

electoral competition with informed and uninformed voters i present a model of electoral competition in which candidates raise campaign contributions by choosing policies that benefit interest groups and then expend those contributions to influence voters who are uninformed about the policies informed voters however vote based on those policies so candidates face a trade off between choosing a policy to generate funds to attract the uninformed vote and choosing a policy to attract the informed vote electoral equilibria are characterized for two categories of policies particularistic and collective in the case of particularistic policies the equilibrium policies of the candidates are separated if the proportion of uninformed voters is sufficiently high and the degree of separation is an increasing function of that proportion the model is extended to include the public financing of elections and incumbency advantages for the case of collective policies the candidates locate at the median of the ideal points of the informed voters and contributions are zero

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

oil and the macroeconomy when prices go up and down an extension of hamilton s results in an important paper hamilton 1983 demonstrated a strong correlation between oil price changes and gross national product growth in u s data however his study pertained to a period in which all the large oil price movements were upward and thus it left unanswered the question whether the correlation persists in periods of price decline moreover the price variable he used was somewhat distorted by price controls in the 1970s this note investigates whether hamilton s results continue to hold when the sample is extended to include the recent oil market collapse and the oil price variable is corrected for the effects of price controls particular attention is given to the possibility of asymmetric responses to oil price increases and decreases as suggested in the structural employment literature loungani 1986 davis 1987 hamilton 1988 like hamilton i based my investigation on the gnp equation in sims s 1 980b six variable quarterly vector autoregressive model

oil shocks and aggregate macroeconomic behavior the role of monetary policy a recent paper by bernanke gertler and watson 1997 suggests that monetary policy could be used to eliminate any recessionary consequences of an oil price shock this paper challenges this conclusion on two grounds first we question whether the federal reserve actually has the power to implement such a policy for example we consider it unlikely that additional money creation would have succeeded in reducing the fed funds rate by 900 basis points relative to the values seen in 1974 second we point out that the size of the effect that bernanke gertler and watson attribute to oil shocks is substantially smaller than that reported by other researchers primarily due to their choice of a shorter lag length than that used by other researchers we offer evidence in favor of the longer lag length employed by previous research and show that under this specification even the aggressive federal reserve policies proposed would not have succeeded in averting a downturn