The Oil Price-Macroeconomy Relationship Since the Mid-1980s: A Global Perspective

We investigate the oil price-macroeconomy relationship from a global perspective, by means of a large scale macro-financial-econometric model. In addition to real activity, we consider fiscal and monetary policy responses and labor and financial markets conditions, in order to provide a comprehensiv...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2013-07, Vol.34 (3), p.153-189
Main Author: Morana, Claudio
Format: Article
Language:English
Subjects:
Commodities
Commodity futures
Commodity markets
Correlation analysis
Crude oil prices
Economic conditions
Forecasts and trends
Futures market
Futures markets
Labor
Macroeconomics
Market conditions
Market prices
Market supply
Marketing
Markets
Oil price shocks
Oil prices
Persian Gulf
Policies
Price volatility
Real wages
Speculation
Studies
Supply and demand
Supply shocks
Volatility
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Summary:We investigate the oil price-macroeconomy relationship from a global perspective, by means of a large scale macro-financial-econometric model. In addition to real activity, we consider fiscal and monetary policy responses and labor and financial markets conditions, in order to provide a comprehensive account of the macro-financial effects of oil price shocks. We find that oil market supply side, speculative, preferences, and volatility shocks exercised recessionary effects during the first and second Persian Gulf War and 2008 oil price episodes. As long as oil supply will keep expanding at a slower pace than required by demand conditions, and in so far as the recently passed regulatory provisions aimed at controlling financial speculation in the oil (and other commodities) futures market will prove unsuccessful, a recessionary bias, determined by higher and more uncertain real oil prices, may then be expected to persist also in the near future.
ISSN:0195-6574
1944-9089
DOI:10.5547/01956574.34.3.8