2008/04/18 by Lutz Kilian · 388 citations
Economics, Econometrics and Finance · Energy · #Econometrics #Economics #Endogeneity #Energy, Environment, and Transportation Policies #Global Energy and Sustainability Research #Inflation (cosmology) #Market Dynamics and Volatility #Monetary economics #Monetary policy #Oil price #Oil supply #Relative price #Shock (circulatory) #Supply shock
paper · open access · doi:10.1162/rest.90.2.216
published in The Review of Economics and Statistics 90(2), 216-240 (The MIT Press)
openalex publication_date 2008/04/18 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The paper proposes a new measure of exogenous oil supply shocks. The timing, the magnitude, and the sign of this measure may differ greatly from current state-of-the-art estimates. It is shown that only a small fraction of the observed oil price increases during oil crisis periods can be attributed to exogenous oil production disruptions. Exogenous oil supply shocks cause a sharp drop of U.S. real GDP growth after five quarters rather than an immediate and sustained reduction in economic growth and a spike in CPI inflation after three quarters. Overall, exogenous oil supply shocks made remarkably little difference for the evolution of the U.S. economy since the 1970s, although they did matter for some historical episodes.