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

capital allocation how the us compares with other major industrialized nations data for the seven major industrialized nations spanning two decades provide evidence that capital formation as a percentage of gross domestic product differs significantly among the major industrialized nations comparatively the us ranks among the leaders in residential structures and among the lowest in commercial structures however us private sector allocation of capital to machinery and equipment appears to be in line with other major trading nations the rate of capital cost recovery appears to affect the amount of capital allocated to commercial structures but not to residential structures or machinery and equipment likewise changes in the capital cost recovery provisions under the economic recovery tax act of 1981 seem to have led to an increase in capital allocated to commercial structures and to a marginal increase in capital allocated to machinery and equipment

measuring climatic impacts on energy consumption a review of the empirical literature abstract this paper reviews the literature on the relationship between climate and the energy sector in particular we primarily discuss empirical papers published in peer reviewed economics journals focusing on how climate affects energy expenditures and consumption climate will affect energy consumption by changing how consumers respond to short run weather shocks the intensive margin as well as how people will adapt in the long run the extensive margin along the intensive margin further research that uses household and firm level panel data of energy consumption may help identify how energy consumers around the world respond to weather shocks research on technology adoption e g air conditioners will further our understanding of the extensive margin adjustments and their costs we also note that most of the literature focuses on the residential sector similar studies are urgently needed for the industrial and commercial sectors

the non linear link between electricity consumption and temperature in europe a threshold panel approach this paper investigates the relationship between electricity demand and temperature in the european union we address this issue by means of a panel threshold regression model on 15 european countries over the last two decades our results confirm the non linearity of the link between electricity consumption and temperature found in more limited geographical areas in previous studies by distinguishing between north and south countries we also find that this non linear pattern is more pronounced in the warm countries finally rolling regressions show that the sensitivity of electricity consumption to temperature in summer has increased in the recent period

asymmetric effects of oil price uncertainty on corporate investment abstract using a comprehensive data set of a large panel of us firms over 1984 2017 we show that the negative effect of crude oil price return uncertainty on investments is asymmetric in particular we show that investment is more significantly reduced following the volatility of positive oil price changes than that of negative changes and this asymmetric effect is more pronounced in small firms in addition we find that the asymmetric effect is stronger in the crude oil and gas producing companies where the effect of the volatility of negative oil price changes is greater than that of positive oil price changes we also find that the impact of positive or negative oil price change uncertainty on investments substantially differs across different industries the results are quite robust to the way in which we measure the investment and oil price uncertainty and to alternative regression methods

wage determination in the uk this paper offers a sysnthesis of a number of important complementary theories of wage determination the model is estimated and tested with respect to its long run and dynamic properties applying johansen s 1998 fiml estimation procedure the maximum eigenvalue and the trace tests suggested two cointegrating vectors and estimated and another the underlying theoritical model we combined both vectors and estimated in a second step an error correction model which was satisfactory with regard to its in sample and out of sample performance none of the assumptions for ols estimation were violated and the recursive estimation revealed model stability additionally the forecasting ability of the model was satisfactory the main feauture of this model is that conflict elements are of parmount in the uk wage determination

the effects of oil price uncertainty on global real economic activity this paper investigates the effect of oil price uncertainty on global real economic activity using a quarterly vector autoregressive model with stochastic volatility in mean stochastic volatility allows oil price uncertainty to vary separately from changes in the level of oil prices and allows one to incorporate an extraneous indicator of oil price uncertainty such as realized volatility that greatly improves the precision of the estimated uncertainty series the estimation results show that an oil price uncertainty shock has negative effects on world industrial production all else equal for example it is shown that a doubling of oil price volatility is associated with a cumulative decline as high as 0 3 percentage points in world industrial production

inflation and economic growth in an open developing country the case of brazil this articles studies the relationship between inflation and gdp growth after trade and financial liberalisation in brazil the aim is to provide an explanation for the inverse relationship between economic growth and inflation verified in this economy in the considered period tradeable and non tradeable inflation experiences are studied separately for this purpose the article suggests a model for the relationship between inflation and economic growth under the cost based price approach the model is estimated for the case of brazil confirming the relationships postulated in the article

oil price shocks policy uncertainty and stock returns of oil and gas corporations abstract this paper investigates the effects of oil price shocks and economic policy uncertainty on the stock returns of oil and gas companies we find that an oil demand side shock has a positive effect on the return of oil and gas companies on average whereas shocks to policy uncertainty have a negative effect on the return historical decomposition shows that the effects of oil shocks on the stock return are amplified by the endogenous policy uncertainty responses these results are consistent with those for major integrated oil and gas companies the return responses however show heterogeneous effects of structural shocks on upstream midstream and downstream oil and gas companies suggesting that a well diversified portfolio is obtainable

allocative disturbances and specific capital in real business cycle theories chanted albeit in varying degree with business cycle theories that either posit unexplained nominal wage and price rigidities or rely on misperceptions about nominal variables as a key driving force one response to this disenchantment has been a concentration of research effort on real business cycle theories aside from dissatisfaction with competitor theories the very visible oil price shock episodes of the 1970 s lent plausibility to the view that exogenous real disturbances cause large fluctuations in aggregate economic activity this essay on real business cycle theory considers the role of allocative disturbances in aggregate economic fluctuations when human and physical capital are specialized by allocative disturbances i mean events that impinge on the economy by inducing a costly time consuming reallocation of specialized resources at least since the publication of ricardo s principles in 1817 economists have recognized some of the potentially important aggregate consequences of allocative disturbances ricardo writes

the macroeconomic strike model a study of seventeen countries 1948 1975 this paper reports the results of an analysis of data on industrial conflict strikes and lockouts in seventeen oecd countries during the period 1948 75 a number of models are tested on this broad data set including the major elements of the ashenfelter and johnson model contrary to ashenfelter and johnson s results for the united states this study finds for most countries a positive relationship between the number of conflicts and the rate of increase in real wages in manufacturing further the increase in nominal wages produces stronger results in all models tested than the increase in real wages the effect of unemployment is unstable across countries and only one of two political variables yields even modest results the authors suggest that an explanation of their findings might be found in the relationship between changes in the wage structure and changes in the level of conflict

are unemployment and out of the labor force behaviorally distinct labor force states this paper tests the hypothesis that the classifications unemployed and out of the labor force are behaviorally meaningless distinctions this hypothesis is rejected distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment the evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process in an appendix we demonstrate that log concavity of the wage offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers

asymmetric effects of oil price changes on the balance of trade evidence from selected african countries the main new contribution of this study was to delve into the asymmetric impacts of changes in oil prices on the trade balance in the framework of six major african economies to tackle this topic carefully we employ three measures of external balances oil non oil and total trade balances and assess the asymmetric response of the external balances of those six economies to oil price changes in the short and long run like most previous studies we first assume the impacts of oil price fluctuations to be symmetric and employ the linear autoregressive distributed lag ardl method to explore the topic we then separate oil price hikes from oil price plunges and implement the non linear ardl method to reveal that the price of crude oil has a vital role to play in the trade balances for those six african economies further there is evidence of significant asymmetric impacts of oil prices typically on the oil trade balance of africa s top oil producing countries for the non oil and total trade balances in contrast there is little evidence of the asymmetry of oil price changes

the asymmetric impact of oil prices interest rates and oil price uncertainty on unemployment in the us abstract in this study we investigate the presence of asymmetric interactions between oil prices oil price uncertainty interest rates and unemployment in a cointegration framework utilizing the nonlinear auto regressive distributed lag nardl approach we show the asymmetric responses of unemployment to changes in oil prices oil price uncertainty and interest rates in the long run more specifically the results of our analyses suggest that an increase in oil price results in increased unemployment while there is no significant impact of reduced oil prices on the one hand reduced oil price uncertainty leads to a decrease in unemployment whereas an increase in oil price uncertainty does not have an impact we also observe increased unemployment in response to a decrease in interest rates as the impact of increased interest rates is not significant last but not least we find that option implied oil price volatility as a measure of oil price uncertainty outperforms the conditional volatility of crude oil prices in predicting unemployment this study provides valuable implications for policymakers to design sound economic policies

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

role of oil price shocks on macroeconomic activities an svar approach to the malaysian economy and monetary responses abstract this study examines the impact of oil price uncertainty on malaysian macroeconomic activities and monetary responses we use a structural var svar model based on monthly data over the period 1986 2009 the egarch model estimates show an important asymmetric effect of oil price shocks on the conditional oil price volatility dynamic impulse response functions obtained from the svar model show a prolonged dampening effect of oil price volatility shock on malaysian industrial production we also find that levels of consumer price index cpi decline with a positive shock to oil price uncertainty this is the result of negative demand shock due to the postponement of consumption of big ticket items by individuals households and other sectors of the economy we also found that the malaysian central bank adopts an expansionary monetary policy in response to oil price uncertainty variance decomposition analysis reconfirms that volatility in the oil price is the second most important factor to explain the variance of industrial production after its own shocks these results shed some light on how the central bank of malaysia can use controlling mechanisms to stabilize aggregate output and price level

oil shocks and external balances abstract we provide estimates of the effects of demand and supply shocks in the global crude oil market on several measures of oil exporters and oil importers external balances including the oil trade balance the non oil trade balance the current account capital gains and changes in net foreign assets nfa first we show that the effect of oil demand and supply shocks on the merchandise trade balance and the current account which depending on the source of the shock can be large depends critically on the response of the non oil trade balance our results provide evidence of an intermediate degree of international financial integration second we document the presence of large and systematic valuation effects in response to these shocks valuation effects overall tend to cushion the effect of oil demand and supply shocks on the nfa positions of oil exporters and oil importers third we quantify the overall importance of global business cycle demand shocks as well as oil market specific demand and supply shocks for external balances

empirical analysis of macroeconomic time series var and structural models abstract var and structural econometric models have complementary roles in the modelling of macroeconomic time series a constant parameter var provided it is statistically well specified constitutes a valid basis for testing hypotheses of dynamic specification exogeneity and a priori structure thus facilitating model evaluation as well as suggesting a potentially efficient model development strategy deterministic e g trends and regime shifts and stochastic e g integrated variables non stationarities are analysable within this framework and the johansen maximum likelihood procedure for cointegrated systems is used in an analysis of the determination of earnings prices productivity and unemployment in the u k

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

structural change and the macroeconomic effects of oil shocks empirical evidence from the united states and japan abstract this paper investigates whether the usa and japan have become better insulated from oil price disturbances due to more favorable structural conditions new production technologies allowing greater energy substitution the development of energy commodity markets reduced energy intensity of production more market oriented energy policies and so on we decompose the influences of oil shocks on real gnp growth and inflation movements in the context of a simultaneous equation model where identification is partly achieved by restricting the long run dynamics we find that oil shocks accounted for a greatly reduced fraction of real gnp growth and inflation variance in both countries primarily because of superior insulation characteristics rather than reduced importance of oil disturbances our estimates suggest that a similar percentage oil price hike would have exerted about one quarter the contractionary effect on real gnp and upward push in inflation in the 1980s compared with the previous two decades jel e31 e32 f30

the non linear impact of oil price on the oil demand a panel smooth transition regression model was adopted to analyse the non linear impact of oil prices on oil demand data for 42 countries was obtained from the international energy agency for the

asymmetries in the responses of regional job flows to oil price shocks this paper studies the effect of oil price innovations on manufacturing job flows across u s states first i estimate a nonlinear structural equation model and compute impulse response functions by monte carlo integration i find asymmetries in the responses of job flows to positive and negative oil price innovations yet these asymmetries do not pass a test of symmetry on the impulse responses especially after accounting for data mining third i use a test for the absence of job reallocation to evaluate whether an unexpected increase in the real price of oil price triggers an important change in job reallocation i find that oil price shocks have limited regional allocative effects

what central bankers need to know about forecasting oil prices central banks routinely use short horizon forecasts of the quarterly price of oil in assessing the global and domestic economic outlook we address a number of econometric issues specific to the construction of quarterly oil price forecasts in the united states and abroad we show that quarterly forecasts of the real price of oil from suitably designed vector autoregressive models estimated on monthly data generate the most accurate real time forecasts overall among a wide range of methods including quarterly averages of forecasts based on monthly oil futures prices no change forecasts and forecasts based on regression models estimated on quarterly data

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

wage determiniation in the uk further empirical results using conintegraion the present paper examines the long run behaviour of two types of wage models for the uk over the preiod 1996 1 1989 2 these models differing in their theoretical construction are estimated and explored using various tests for cointegration the hall 1986 1989 model is based on saragan s 1964 wage specification while the arestis and skott 1993 and arestis and biefang frisancho mariscal 1993 model is concerned with distributional and wage efficeincy theortical effects both models exhibit at least one economically sensible long run relationship for wage determination with significant and correctly signed parameters and show expected proportionality between wages and productivity further the arestis and skott 1993 model shows the effects of effciency wage elements on effort

models of energy use putty putty versus putty clay energy use is inelastic in time series data but elastic in international cross section data two models of energy use reproduce these elasticities a putty putty model with adjustment costs developed by pindyck and rotemberg 1983 and a putty clay model in the pindyck rotemberg model capital and energy are highly complementary in both the short run and the long run in the putty clay model capital and energy are complementary in the short run but substitutable in the long run we highlight the differences in the cross section implications of the models by considering the effect of an energy tax on output in both models in the putty putty model an energy tax that doubles the price of energy leads to a fall in output in the long run of 33 in contrast the same tax in the putty clay model leads to a fall in output of only 5 3

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

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

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

industrial conflicts and economic conditions a comparative empirical investigation abstract the empirical work analyses eleven macro series from 1948 to 1975 for seventeen oecd countries including three series for conflicts strikes and lock outs it is demonstrated that the series for the plain number of conflicts are always the best in macro modelling hence conflicts matter less as such than as an indicator of the labour market climate three links between conflicts and the economy are examined i wage inflation is found the main factor generating conflicts ii no production loss due to conflicts appears in our annual macro series iii the main thrust is the examination of the fairly successful role conflicts can play as a push proxy in cost push models finally the strong international elements in both wage inflation and conflicts are discussed

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

oil price uncertainty and the u s stock market analysis based on a garch in mean var model abstract this paper uses a bivariate garch in mean var model to examine the effect of oil price uncertainty on the u s real stock returns at the aggregate and sectoral levels estimation results suggest that there is no statistically significant effect of oil price volatility on the u s stock returns the absence of an uncertainty effect might be explained by the fact that companies are likely to hedge against fluctuations in oil prices it could also stem from the ability of most companies to transfer the higher cost of oil to customers moreover the impulse responses indicate that accounting for oil price uncertainty oil price increases and decreases have symmetric effects on the u s aggregate stock returns in that energy price increases and decreases are estimated to have equal and opposite effects on the u s financial market however this symmetric effect doesn t hold across all the sectors studied in this paper

asymmetries in the response of economic activity to oil price increases and decreases abstract it has been common to assume that the relationship between economic activity and oil prices is asymmetric theoretical underpinnings for this asymmetry include costly sectoral reallocation partial equilibrium models of irreversible investment and some version of precautionary savings yet recent studies that use new methodologies to test for asymmetries in u s data have cast some doubts on that premise in this paper we use state of the art techniques to evaluate the presence of asymmetries for a set of oecd countries containing both oil exporters and oil importers we find very little support for the hypothesis that the response of industrial production to oil price increases and decreases is asymmetric our results have important implications for theoretical models of the transmission of oil price shocks they point towards the importance of direct supply and direct demand transmission channels as well as indirect transmission channels that imply a symmetric response

hourly wages and working time in the dutch market sector 1962 1995 this article analyses the joint behaviour of hourly wages and standard hours in the netherlands with respect to the development of full time hours to different hypotheses are suggested work sharing or productivity sharing under the work sharing hypothesis high unemployment would lead to reduced hours whereas under productivity sharing increased productivity leads to higher wages or reduced hours the evidence is in favour of the productivity hypothesis there is no direct impact of unemployment on the evolution of hours moreover although reduced hours tend to increase hourly wages in the short run this is not the case in the long run

topics in the oecd phillips curve how strongly have wages and unemployment been related in oecd countries during the postwar period a simple answer is that on average a one percentage point higher rate of unemployment has been associated with a fall of about one percentage point in the rate of nominal wage increase in the current year compared with the rate of increase a year earlier but such a figure needs interpretation and the aim here is to describe wage behaviour in more detail

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

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

the effects of oil price shocks on job reallocation we investigate the effect of oil price innovations on u s manufacturing job flows using a simultaneous equation model that nests symmetric and asymmetric responses we find no evidence of asymmetry in the response of job flows to positive and negative oil price innovations we then inquire whether firms when facing positive shocks shed jobs faster than they create jobs we show that positive innovations lead to a decline in net employment and an increase in job reallocation possibly due to search and matching issues yet the latter effect becomes statistically insignificant when we control for data mining we demonstrate that the cumulative one year effect of oil price shocks on job creation and destruction was smaller during the great moderation but it was larger for gross job reallocation these variations were caused by a change in the transmission channel and not by smaller oil price shocks

the aggregate effects of sectoral reallocations abstract can a one time permanent change in the fundamentals behind the sectoral composition of the economy prompt an aggregate downturn can this downturn be non negligible even if one uses us data to determine the relative size of gross vs net job flows and the importance of job creation costs can one consider the military build down of the 1990s as a plausible cause for the 1990 1991 recession do sectoral reallocations generate responses that are qualitatively similar to productivity shocks we use a variant of the mortensen pissarides 1994 review of economic studies 61 397 415 job creation destruction model calibrate it to us labor market data and run experiments that suggest one can answer yes to all these questions

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

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

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

temperature and seasonality influences on spanish electricity load abstract deregulation of the spanish electricity market in 1998 and the possible listing of electricity or weather derivative contracts have encouraged the study of the relationship between electricity demand and weather in spain in this paper a transfer function intervention model is developed for forecasting daily electricity load from cooling and heating degree days the influence of weather and seasonality is proved and is significant even when the autoregressive effects and the dynamic specification of the temperature are taken into account the estimated general model shows a high predictive power the results and information presented in this paper could be of interest for current users and potential traders in the deregulated spanish electricity market

oil price shocks and u s economic activity abstract our understanding of the sources of oil price fluctuations and their effects on the u s economy has undergone important transformations in the last decades first several studies have demonstrated the importance of identifying the causes of oil price fluctuations whether they are driven by demand or supply shocks instead of assuming that oil price changes are exogenous to the evolution of the world s economic activity second new methodologies have allowed researchers to re evaluate the functional form of the relationship between oil prices and u s gdp its components and job flows third significant advances have been made in understanding the relationship between oil price uncertainty news economic policy uncertainty and aggregate economic activity finally investigations into the time varying nature of oil price macroeconomy relationship have provided important insights into the reasons why unexpected increases in oil prices appear to shock less now than in the 1970s this paper reviews the studies that have contributed to these different aspects of the literature

how sensitive are consumer expenditures to retail energy prices abstract there is growing evidence that the primary effect of energy price shocks on the u s economy involves a reduction in consumer spending we quantify the direct effect on real consumption of unanticipated changes in discretionary income shifts in precautionary savings and changes in the operating cost of energy using durables the possibility of asymmetries in the response of real consumption to energy price shocks is also considered we demonstrate that linear models are consistent with the symmetric behavior of real consumption in 1979 when energy prices increased sharply and in 1986 when they fell sharply it is shown that historically energy price shocks have been an important factor in explaining u s real consumption growth but by no means the dominant factor

asymmetric responses of consumer spending to energy prices a threshold var approach abstract we document asymmetric responses of consumer spending to energy price shocks using a threshold vector autoregressive model estimated with bayesian methods on u s data with high and low real energy inflation regimes positive energy price shocks have a greater negative effect on consumption compared with the increase in consumption that arises from negative energy price shocks for large shocks the cumulative consumption responses are three to five times greater for positive than negative shocks in disaggregated spending data the asymmetric responses are strongest for durable goods consumption but asymmetries are also present in the responses of nondurables and services consumption

new estimates of the security costs of u s oil consumption abstract in recent years the united states has become much more self reliant in producing oil and a newer economics literature suggests that oil demand may be more elastic and u s gdp may be less sensitive to world oil price shocks than was previously estimated these developments suggest somewhat lower security costs may be associated with u s oil consumption this analysis provides updated estimates of the security premiums for u s consumption of imported oil u s consumption of domestically produced oil and the substitution of imported oil for domestically produced oil estimates of the expected security costs of u s oil consumption are provided over the time horizon from 2015 to 2040 while taking into account projected world oil market conditions the probabilities and sizes of world oil supply disruptions the response of world oil prices to those supply disruptions and the response of u s real gdp to those oil price shocks the estimated oil security premiums suggest that u s oil security has become less of a policy concern

a duration model of irreversible oil investment theory and empirical evidence the aim of this paper is to analyse the implications of the theory of irreversible investment under uncertainty for investment in oil fields on the united kingdom continental shelf ukcs we consider the problem of an operator who owns a licence to develop and extract oil from a field of known capacity an intertemporal optimization model in discrete time is developed to derive decision rules for the timing of the irreversible development investment and for the optimal rate of extraction model simulation is then used to describe the properties of the numerical solutions the predictions of the theory on the determinants of the irreversible investment decision are then examined using statistical duration analysis data on the length of the time period between discovery and development are available for individual fields on the ukcs we measure the duration of the irreversible investment gestation lag for each field and test the model by assessing the significance of the theoretical variables in explaining the significance of such a lag both our theoretical model and our empirical results suggest the importance of a nonlinear interaction of the level of oil prices and the volatility of oil prices in determining the development lag the simulation of our theoretical model shows a nonlinear impact of oil price volatility on the trigger level of oil prices our empirical results suggest that the effect of price volatility is a function of the expected price level with increased price volatility having a positive impact on the duration of investment appraisal when expected prices are low and a negative impact when they are high

oil price uncertainty and u s employment growth abstract this paper studies the effects of oil price changes on u s aggregate and sectoral employment growth in the presence of time varying oil price uncertainty we estimate a bivariate garch in mean var model using u s monthly data of oil prices and employment growth for the period 1974 m2 2018 m11 based on the results we show that an increase in oil prices reduces total employment growth and that in most private sectors but the public sector is largely unaffected the effects on employment growth in various hub sectors are also different furthermore employment growths at both aggregate and disaggregate levels respond asymmetrically to positive and negative oil price shocks which could possibly be attributed to oil price uncertainty this asymmetric impact is more evident when the model is estimated on the entire sample than on the 1970s sample implying that the role of oil price uncertainty in accounting for variations in employment growth can differ over time these findings underline the empirical relevance of oil price uncertainty for the u s labor market dynamics

segment shifts and capacity utilization in the u s automobile industry an important school of thought argues that sectoral shifts may account for a substantial portion of aggregate fluctuations e g david lilien 1982 fischer black 1987 steven davis 1987 events such as the oil shocks of the 1970 s exchange rate fluctuations and shifts in government spending have their direct effect on the composition of economic activity the sectoral shift literature argues that they may affect the level and the dynamics of output and employment as well the typical story is of a slowly functioning labor market after a sectoral shock search behavior matching problems and a time cost of switching sectors slow the reallocation of workers across sectors this focus however misses important elements of the reallocation problem as black 1987 has argued not only sector specific human capital but also complementary physical and managerial engineering organization etc capital must be reallocated or recreated in response to sectoral shocks if jobs are linked to capital then the slow adjustment of labor may be attributable in part to the sluggishness in the adjustment of capital this paper presents an empirical study of the impact of oil shock sectoral shifts within the u s automobile industry from an analytical perspective a sectoral shift is any event that raises desired output and employment in some sectors and lowers them in others for our purposes a sector is a size class of automobiles within the automobile industry we will be able to study two distinct questions first did the oil priceinduced shocks to the composition of demand interact with short run rigidities in supply to limit industry wide capacity utilization we will quantify the extent to which the changing composition of demand was reflected in a lower aggregate output level with obvious consequences for the employment of capital and of labor and for the return to firms knowledge capital our second question concerns the pace of the intermediate run adjustment to sectoral shocks how rapidly could capital and labor be reallocated to new demand conditions such considerations determine the impact of sectoral shocks on employment and capacity utilization dynamics

impact of temperature on electricity demand evidence from delhi and indian states abstract electricity for cooling improves health and quality of life and is an important mode of adapting to extreme weather conditions and to climate change this study measures the change in electricity demand in response to weather shocks at the household level in delhi and at various aggregate levels in india our econometric analysis uses a semi parametric model to capture the nonlinearity of short run temperature response on average aggregate electricity demand in india increases by 11 or more at temperatures above 30 c from demand at temperatures of 21 24 c with substantial heterogeneity across states aggregate demand in delhi increases by 30 or more at temperatures above 30 c using rich micro data on electricity demand in delhi we do a first of its kind estimation of household level temperature response we find evidence that low income consumers especially those living in slums show limited incremental response to high temperatures likely due to an absence of cooling options these findings underscore the need to improve our understanding of the constraints posed by poverty on climate change adaptation and for interventions to mitigate risks of heat stress among the poor this also suggests rising affluence will lead to sharp increases in electricity demand for cooling

asymmetric oil prices and trade imbalances does the source of the oil shock matter abstract we examine the asymmetric effects of oil supply shocks shocks to global real economic activity and oil specific demand shocks on the oil non oil and overall trade balances of a large sample of oil exporters and oil importers our empirical strategy accounts for endogenous oil prices heterogeneous parameters and error cross section dependence within a panel framework we find that the pattern of asymmetries in the oil price trade balance relationship depends on the source of the shock for both oil exporters and oil importers oil supply expansions are more important than oil supply disruptions we discuss the role that saudi arabia plays in limiting the global effects of oil supply disruptions although increases in global demand deteriorate trade balances for oil importers and improve them for oil exporters decreases in global demand have a similar rather than an opposite effect our results corroborate the existing evidence that oil price increases only generate large global imbalances if they result from demand side shocks and we present new evidence that oil price decreases only benefit oil importers if they result from supply side shocks

prices versus policy an analysis of the drivers of the primary fossil fuel mix abstract energy policymakers often attempt to shape their countries energy mix rather than leave it purely to market forces by calibrating and simulating a dynamic stochastic general equilibrium dsge model this paper analyzes the primary fossil fuel mix in the usa and compares it to germany and the uk given the different evolution of the mixes and the different roles played by relative prices and policy in north america and europe it is found that the model explains well the evolution of the primary fossil fuel mix in the usa for the period 1980 2014 suggesting that relative fossil fuel prices generally dominated in determining the mix during this time however this is not the case for germany and the uk for both countries the model performs well only for the period after the market oriented reforms in the 1990s additionally the volatility of private consumption and output for the pre and post reform periods is evaluated for germany and the uk and it is found that the liberalized energy markets brought about a transition from coal to natural gas but with increased macroeconomic volatility

how does coal price drive up inflation reexamining the relationship between coal price and general price level in china abstract due to the coal dominated energy structure china is currently facing significant economic uncertainties brought forward by instability of coal price by separating the asymmetric effects that how upward and downward coal price changes pass through to the economy this paper reexamines the relationship between coal price and general price level in china the asymmetric effects are investigated via vector autoregression models granger causality tests and impulse response function analyses using the monthly time series data from jun 98 to sep 14 results show negative coal price change presents more significant impact on inflation than positive one the inflation responses very abruptly to coal price shock in the short run but the impact regresses rapidly along time accumulatively a 1 increase of coal price will push cpi and ppi up by 0 04 and 0 12 while a 1 decrease of coal price will pull them down by 0 08 and 0 17 respectively the linkage among coal price change ppi and cpi is demonstrated as the main transmission channel of price shock the inflationary effect is strong in the initial stage but will be weakened in the later stage since the pass through effect from ppi to cpi is tiny which confirms ppi is more responsive than cpi to coal price change for policy implications how to avoid extreme volatility in general price level is a major concern of recent agendas such as reforming energy market and building green fiscal system

boom or gloom examining the dutch disease in two speed economies traditional studies of the dutch disease do not account for productivity spillovers between the booming resource sector and other domestic sectors we put forward a simple theory model that allows for such spillovers we then identify and quantify these spillovers using a bayesian dynamic factor model the model allows for resource movements and spending effects through a large panel of variables while also identifying disturbances to other shocks using australia and norway as representative cases studies we find that a booming resource sector has substantial productivity spillovers on non resource sectors effects that have not been captured in previous analysis

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

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

the effect of climate change on electricity expenditures in massachusetts abstract climate change affects consumer expenditures by altering the consumption of and price for electricity previous analyses focus solely on the former which implicitly assumes that climate induced changes in consumption do not affect price but this assumption is untenable because a shift in demand alters quantity and price at equilibrium here we present the first empirical estimates for the effect of climate change on electricity prices translated through the merit order dispatch of existing capacity for generating electricity climate induced changes in daily and monthly patterns of electricity consumption cause non linear changes in electricity prices a 2 c increase in global mean temperature increases the prices for and consumption of electricity in massachusetts usa such that the average household s annual expenditures on electricity increase by about 12 commercial customers incur a 9 increase these increases are caused largely by higher prices for electricity whose impacts on expenditures are 1 3 and 3 6 fold larger than changes in residential and commercial consumption respectively this suggests that previous empirical studies understate the effects of climate change on electricity expenditures and that policy may be needed to ensure that the market generates investments in peaking capacity to satisfy climate driven changes in summer time consumption