Oil prices and the US economy: Where is the boom?

Arbeitspapier

The author argues that the economic benefits of low gasoline prices for the U.S. economy have fallen substantially since the reemergence of America as a major oil producer. The old rule-ofthumb that a 10% fall in the oil price raises inflation-adjusted U.S. GDP by 0.2% is too large - the impact on economic activity should be closer to zero, and may even be negative if consumption grows slowly. The reasons for this change are straightforward, if underappreciated: (i) the value of oil production accounts for a larger share of the U.S. economy; and (ii) consumers are not spending the windfall like they used to because of higher debt levels, limited access to credit, slow wage growth, and an older population.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Discussion Papers ; No. 2015-48

Classification and Topics

• Classification: Wirtschaft ; Input-Output Models ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; Energy and the Macroeconomy
• Subject: oil price ; economic activity ; input-output ; consumption

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Arora, Vipin
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/111681
• Last update: 10.03.2025, 11:42 AM CET