IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v28y2007i4p31-46.html
   My bibliography  Save this article

Oil Shocks and Real U.S. Income

Author

Listed:
  • Hillard G. Huntington

Abstract

The analysis explains how previous oil shocks have affected real U.S. income. Real income differs from aggregate economic output (GDP) because it includes the purchasing power losses associated with more expensive imported petroleum. Real income declines immediately during the same quarter as the oil price shock as opposed to the output effects, which are lagged over several quarters. These immediate losses can be significant, reaching as much as 1.7% of the baseline value in the same quarter, for a doubling of crude oil prices. Expanding coverage to include purchasing power losses allows policy analysts to evaluate a range of different policy instruments that can influence oil prices, such as the building and release of the strategic petroleum reserve.

Suggested Citation

  • Hillard G. Huntington, 2007. "Oil Shocks and Real U.S. Income," The Energy Journal, , vol. 28(4), pages 31-46, October.
    • Handle: RePEc:sae:enejou:v:28:y:2007:i:4:p:31-46
    DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No4-2
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol28-No4-2
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol28-No4-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hamilton, James D., 2003. "What is an oil shock?," Journal of Econometrics, Elsevier, vol. 113(2), pages 363-398, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abhay Abhyankar, Bing Xu, and Jiayue Wang, 2013. "Oil Price Shocks and the Stock Market: Evidence from Japan," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Filis, George & Degiannakis, Stavros & Floros, Christos, 2011. "Dynamic correlation between stock market and oil prices: The case of oil-importing and oil-exporting countries," International Review of Financial Analysis, Elsevier, vol. 20(3), pages 152-164, June.
    3. Murphy, Frederic & Oliveira, Fernando S., 2010. "Developing a market-based approach to managing the US strategic petroleum reserve," European Journal of Operational Research, Elsevier, vol. 206(2), pages 488-495, October.
    4. Coelho dos Santos, Marcelo Bittencourt & Klotzle, Marcelo Cabus & Baptista Palazzi, Rafael, 2024. "The effect of oil discovery in Brazil: A synthetic control approach," Resources Policy, Elsevier, vol. 92(C).
    5. Jaime Casassus & Freddy Higuera, 2013. "The Economic Impact of Oil on Industry Portfolios," Documentos de Trabajo 433, Instituto de Economia. Pontificia Universidad Católica de Chile..
    6. Jaime Casassus & Freddy Higuera, 2011. "Stock Return Predictability and Oil Prices," Documentos de Trabajo 406, Instituto de Economia. Pontificia Universidad Católica de Chile..
    7. Greene, D.L. & Boudreaux, P.R. & Dean, D.J. & Fulkerson, W. & Gaddis, A.L. & Graham, R.L. & Graves, R.L. & Hopson, J.L. & Hughes, P. & Lapsa, M.V. & Mason, T.E. & Standaert, R.F. & Wilbanks, T.J. & Zu, 2010. "The importance of advancing technology to America's energy goals," Energy Policy, Elsevier, vol. 38(8), pages 3886-3890, August.
    8. Naccache, Théo, 2010. "Slow oil shocks and the "weakening of the oil price-macroeconomy relationship"," Energy Policy, Elsevier, vol. 38(5), pages 2340-2345, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joseph H. Davis & Christopher Hanes & Paul W. Rhode, 2009. "Harvests and Business Cycles in Nineteenth-Century America," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1675-1727.
    2. Antonella Cavallo & Antonio Ribba, 2017. "Measuring the Effects of Oil Price and Euro-area Shocks on CEECs Business Cycles," Department of Economics 0111, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    3. Zied Ftiti and Fredj Jawadi, 2019. "On the Oil Price Uncertainty," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    4. Afees A. Salisu & Umar B. Ndako & Idris Adediran, 2018. "Forecasting GDP of OPEC: The role of oil price," Working Papers 044, Centre for Econometric and Allied Research, University of Ibadan.
    5. Rajeev Dhawan & Karsten Jeske & Pedro Silos, 2010. "Productivity, Energy Prices and the Great Moderation: A New Link," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 715-724, July.
    6. Ortiz-Cruz, Alejandro & Rodriguez, Eduardo & Ibarra-Valdez, Carlos & Alvarez-Ramirez, Jose, 2012. "Efficiency of crude oil markets: Evidences from informational entropy analysis," Energy Policy, Elsevier, vol. 41(C), pages 365-373.
    7. Jinjarak, Yothin, 2014. "Equity prices and financial globalization," International Review of Financial Analysis, Elsevier, vol. 33(C), pages 49-57.
    8. Awerbuch, Shimon & Sauter, Raphael, 2006. "Exploiting the oil-GDP effect to support renewables deployment," Energy Policy, Elsevier, vol. 34(17), pages 2805-2819, November.
    9. Rebeca Jiménez-Rodríguez, 2004. "Oil Price Shocks: Testing for Non-linearity," CSEF Working Papers 115, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    10. Gerard H. Kuper & Daan P. van Soest, 2006. "Does Oil Price Uncertainty Affect Energy Use?," The Energy Journal, , vol. 27(1), pages 55-78, January.
    11. Naoyuki Yoshino & Victoriia Alekhina, 2016. "Impact of oil price fluctuations on an energy-exporting economy: Evidence from Russia," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 2(4), pages 156-166.
    12. Karl Pinno & Apostolos Serletis, 2013. "Oil Price Uncertainty and Industrial Production," The Energy Journal, , vol. 34(3), pages 191-216, July.
    13. Aharon, David Y. & Azman Aziz, Mukhriz Izraf & Kallir, Ido, 2023. "Oil price shocks and inflation: A cross-national examination in the ASEAN5+3 countries," Resources Policy, Elsevier, vol. 82(C).
    14. Laure Crusson & Muriel Barlet, 2009. "Quel impact des variations du prix du pétrole sur la croissance française ?," Économie et Prévision, Programme National Persée, vol. 188(2), pages 23-41.
    15. Andrea Bastianin & Alessandro Lanza & Matteo Manera, 2018. "Economic impacts of El Niño southern oscillation: evidence from the Colombian coffee market," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 623-633, September.
    16. Bhar, Ramprasad & Mallik, Girijasankar, 2010. "Inflation, inflation uncertainty and output growth in the USA," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(23), pages 5503-5510.
    17. Danilo Cascaldi-Garcia & Marija Vukotic, 2022. "Patent-Based News Shocks," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 51-66, March.
    18. Jammazi, Rania, 2012. "Oil shock transmission to stock market returns: Wavelet-multivariate Markov switching GARCH approach," Energy, Elsevier, vol. 37(1), pages 430-454.
    19. Blazsek, Szabolcs & Licht, Adrian, 2018. "Seasonal quasi-vector autoregressive models for macroeconomic data," UC3M Working papers. Economics 26316, Universidad Carlos III de Madrid. Departamento de Economía.
    20. Arturo Lorenzo Valdés & Rocío Durán Vázquez & Leticia Armenta Fraire, 2012. "Conditional Correlation Between Oil and Stock Market Returns: The Case of Mexico," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 7(1), pages 49-63, Enero-Jun.

    More about this item

    Keywords

    Oil shocks; oil prices; real income US; GDP; volatility;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:28:y:2007:i:4:p:31-46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.