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A Regime-Switching Analysis of the Impact of Oil Price Changes on the Economies of U.S. States

Author

Listed:
  • Kang, Wei

    (Regional Economic Models, Inc.)

  • Penn, David A.

    (Middle Tennessee State University)

  • Zietz, Joachim

    (Middle Tennessee State University and EBS Universität für Wirtschaft und Recht)

Abstract

The study employs quarterly data from 1958:I to 2010:IV to analyze how state earnings respond to oil price changes. We allow for asymmetric and nonlinear reactions of state earnings through a smooth regime switching model. Fourteen of the 50 states are best modeled with a two regime model. The response of the remaining states can be adequately captured by a linear least squares model. The estimation results show marked differences among states in both the tolerance and the delay of response to an oil price change. The speed at which the transition occurs across regimes varies significantly by state.

Suggested Citation

  • Kang, Wei & Penn, David A. & Zietz, Joachim, 2011. "A Regime-Switching Analysis of the Impact of Oil Price Changes on the Economies of U.S. States," The Review of Regional Studies, Southern Regional Science Association, vol. 41(2,3), pages 81-101, Fall, Win.
    • Handle: RePEc:rre:publsh:v:41:y:2011:i:2:p:81-101
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    Citations

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    Cited by:

    1. Paolo Di Caro, 2017. "Testing and explaining economic resilience with an application to Italian regions," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 93-113, March.
    2. Yue-Jun Zhang & Ting Yao & Zi-Yi Wang, 2015. "The bubble process of international crude oil futures prices: empirical evidence from the STAR model," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 38(1/2/3), pages 109-125.
    3. Nicholas Apergis & Alper Aslan & Goodness C. Aye & Rangan Gupta, 2014. "The Asymmetric Effect of Oil Price on Growth across US States," Working Papers 201459, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    state earnings growth; oil prices; asymmetry; STAR model;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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