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The distributional effects of oil supply news shocks

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  • Drossidis, Theo
  • Mumtaz, Haroon
  • Theophilopoulou, Angeliki

Abstract

This paper uses high frequency data on the distribution of US income to investigate the heterogeneous effects of oil supply news shocks. Using a FAVAR with an external instrument, We show that these shocks have large negative effects on the left and right tail of the distribution. For low income individuals, the effect is driven by a decline in wages and proprietor’s income, while a fall in corporate profits and interest income drives the effect for affluent individuals.

Suggested Citation

  • Drossidis, Theo & Mumtaz, Haroon & Theophilopoulou, Angeliki, 2024. "The distributional effects of oil supply news shocks," Economics Letters, Elsevier, vol. 240(C).
    • Handle: RePEc:eee:ecolet:v:240:y:2024:i:c:s0165176524002532
    DOI: 10.1016/j.econlet.2024.111769
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    Cited by:

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    More about this item

    Keywords

    Oil shock; Income inequality; FAVAR; External instrument identification;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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