Oil, Automobiles, and the U.S. Economy: How Much have Things Really Changed? / Valerie A. Ramey, Daniel J. Vine.

Format:

Book

Author/Creator:

Ramey, Valerie A.

Contributor:

National Bureau of Economic Research.

Vine, Daniel J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16067.

NBER working paper series no. w16067

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Oil, Automobiles, and the U.S. Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

This paper studies the impact of oil shocks on the U.S. economy--and on the motor vehicle industry in particular--and re-examines whether the relationship has changed over time. We find remarkable stability in the response of aggregate real variables to oil shocks once we account for the extra costs imposed on the economy in the 1970s by price controls and a complex system of entitlements that led to some rationing and shortages. To investigate further why the response of real variables to oil shocks has not declined over time, we focus on the motor vehicle industry, which is considered the most important channel through which oil shocks affect the economy. We find that, contrary to common perceptions, the share of motor vehicles in total U.S. goods production has shown little decline over time. Moreover, within the motor vehicle industry, the effects of oil shocks on the mix of vehicle sold and on capacity utilization appear to have been proportional in recent decades to the effects observed in the 1970s.

Notes:

Print version record

June 2010.