Abstract
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.
| Original language | English |
|---|---|
| Pages (from-to) | 523-544 |
| Number of pages | 22 |
| Journal | Energy Policy |
| Volume | 115 |
| DOIs | |
| State | Published - Apr 2018 |
Funding
This manuscript has been authored by UT-Battelle, LLC under Contract No. DE-AC0500OR22725 with the US Department of Energy. The United States Government retains and the publisher, by accepting the article for publication, acknowledges that the United States Government retains a non-exclusive, paid-up, irrevocable, world-wide license to publish or reproduce the published form of this manuscript, or allow others to do so, for United States Government purposes. The Department of Energy will provide public access to these results of federally sponsored research in accordance with the DOE Public Access Plan ( http://energy.gov/downloads/doe-public-accessplan ). Appendix A This material is based upon work supported by the US Department of Energy under the Strategic Petroleum Reserves Office, and performed at Oak Ridge National Laboratory under contract number DE-AC05-00OR22725. The views and opinions of the authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, expressed or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. This material is based upon work supported by the US Department of Energy under the Strategic Petroleum Reserves Office, and performed at Oak Ridge National Laboratory under contract number DE-AC05-00OR22725 . The views and opinions of the authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, expressed or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights.
Keywords
- GDP elasticity
- Heterogeneity
- Meta-analysis
- Oil price shocks
- Partial-robust-M-regression