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The Resource Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise

Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise

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Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise
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Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise
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Summary
Some analysts and economists recently warned that the United States economy faces a much higher risk of recession should the price of oil rise to $100 per barrel or more. In February 2008, spot crude oil prices closed above $100 per barrel for the first time ever, and since then they have climbed even higher. Meanwhile, according to some surveys of economists, it is highly probable that a recession began in the United States in late 2007 or early 2008. Although the findings in this paper are consistent with the view that the United States economy has become much less sensitive to large changes in oil prices, a simple forecasting exercise using Hamilton's model augmented with the first principal component of 85 macroeconomic variables reveals that a permanent increase in the price of crude oil to $150 per barrel by the end of 2008 could have a significant negative effect on the growth rate of real gross domestic product in the short run. Moreover, the model also predicts that such an increase in oil prices would produce much higher overall and core inflation rates in 2009 than most policymakers expect
http://library.link/vocab/creatorName
  • Kliesen, Kevin L
  • Inter-university Consortium for Political and Social Research [distributor]
Label
Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise
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Publication
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23220
Control code
ICPSR23220.v1
Governing access note
Access restricted to subscribing institutions
Label
Oil and the United States Macroeconomy: An Update and a Simple Forecasting Exercise
Publication
Note
23220
Control code
ICPSR23220.v1
Governing access note
Access restricted to subscribing institutions

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