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Did U.S. Consumers Respond to the 2014-2015 Oil Price Shock? Evidence from the Consumer Expenditure Survey

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  • Patrick Alexander and Louis Poirier

Abstract

The impact of oil price shocks on the U.S. economy is a topic of considerable debate. In this paper, we examine the response of U.S. consumers to the 2014-2015 negative oil price shock using representative survey data from the Consumer Expenditure Survey. We propose a difference-in-difference identification strategy based on two factors, vehicle ownership and gasoline reliance, which generate variation in exposure to oil price shocks across consumers. Our findings suggest that exposed consumers significantly increased their spending relative to non-exposed consumers when oil prices fell, and that the average marginal propensity to consume (MPC) out of gasoline savings was above 1. Across products, we find that consumers increased spending especially on transportation goods and non-essential items.

Suggested Citation

  • Patrick Alexander and Louis Poirier, 2020. "Did U.S. Consumers Respond to the 2014-2015 Oil Price Shock? Evidence from the Consumer Expenditure Survey," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:journl:ej41-1-alexander
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    Cited by:

    1. Olivier Gervais, 2019. "How Oil Supply Shocks Affect the Global Economy: Evidence from Local Projections," Discussion Papers 2019-6, Bank of Canada.
    2. Huang, Dayong & Li, Jay Y. & Wu, Kai, 2021. "The effect of oil supply shocks on industry returns," Journal of Commodity Markets, Elsevier, vol. 24(C).

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    JEL classification:

    • F0 - International Economics - - General

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