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Consumer Credit, Oil Prices, and the U.S. Economy

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  • Arora, Vipin

Abstract

Have you paid cash to fill up your gas tank lately? Probably not—and I argue this is one reason why the U.S. economy appears to have become less sensitive to changes in the price of oil. When gas prices rise drivers have increasingly been able to borrow—and firms able to offer incentives—making immediate reductions in the purchases of groceries, electronics, cars, and other goods smaller than in the past. This alters the relationship between oil prices and U.S. economic activity, but does not eliminate it—the money must be paid back after all.

Suggested Citation

  • Arora, Vipin, 2015. "Consumer Credit, Oil Prices, and the U.S. Economy," MPRA Paper 68563, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68563
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    References listed on IDEAS

    as
    1. Reboredo, Juan C., 2012. "Modelling oil price and exchange rate co-movements," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 419-440.
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    5. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
    6. Arora, Vipin, 2015. "Oil prices and the US economy: Where is the boom?," Economics Discussion Papers 2015-48, Kiel Institute for the World Economy (IfW Kiel).
    7. Valerie A. Ramey & Daniel J. Vine, 2011. "Oil, Automobiles, and the US Economy: How Much Have Things Really Changed?," NBER Chapters, in: NBER Macroeconomics Annual 2010, volume 25, pages 333-367, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Arora, Vipin, 2016. "Credit and Oil Consumption," MPRA Paper 71096, University Library of Munich, Germany.

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    More about this item

    Keywords

    oil price; economic activity; credit; consumption;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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