This paper develops an econometric framework for the analysis of exploration and production policies of "price-taking" suppliers, and derives theoretically-consistent exploration and output equations for oil which explicitly take account of the oil discovery process and the intertemporal nature of exploration and production decisions. The framework is then applied to an empirical analysis of oi...

Views stated in Policy Discussion Papers are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Materials may be reprinted, provided that the source is credited. Please send copies of reprinted materials to the editor. Every U.S. recession since 1971 has been preceded by two things: an oil price sho...

The objectives of this study is to investigate the responses of livestock economic variables (namely, output, consumption, prices, labor and capital) to changes in agricultural productivity, monetary, oil revenue and government spending (fiscal policy). To do so, a Dynamic Stochastic General Equilibrium (DSGE) model is constructed for Iran economy disaggregating livestock. Accordingly, the empi...

International trade has been playing an extremely significant role in China over the last 20 years. This paper is aimed to investigate and understand the relationship between China’s macro-economy and oil price from this new perspective. We find strong evidence that the increase of China’s price level resulting from oil price shocks is statistically less than that of its main trade partners’. T...

Applying the simultaneous-equation model, this study finds that the output elasticity with respect to the real oil price is estimated to be -0.042, indicating that if the real oil price rises 10%, real GDP would decrease by 0.42%. In addition, real output in Korea is positively associated with the money supply, real deficit spending, and the real stock price and negatively influenced by real de...

This paper reexamines the oil price-macroeconomy relationship with rolling Granger causality and structural stability tests. It finds that the relationship broke down amidst the falling oil prices and market collapse of the 1980s, suggesting misspecification of the oil price rather than a weakened relationship. Some proposed respecifications of the oil price yield considerable improvements, alt...

WHEN THE U.S. INVADED Iraq in March 2003, many economists feared that the war would lead to a sharp decline in Iraqi oil production, a spike in oil prices, and a woeful U.S. economy that would follow the scripts of the oil shocks of 1973, 1978, and 1990. Real oil prices did increase, indeed more than tripled, from $20 in 2001:Q4 to $62 in 2006:Q3 (in 2007 dollars). But the ailments associated w...

When the U.S. invaded Iraq in March 2003, many economists feared that the war would lead to a sharp decline in Iraqi oil production, a spike in oil prices, and a woeful economy that would follow the scripts of the oil shocks of 1973, 1978, and 1990. There was in fact a moderate decline in world oil production, and real oil prices increased from $20 in 2001:4 to $62 in 2006:3. But the ailments a...

T he relationship between the price of oil and the level of economic activity is a fundamental empirical issue in macroeconomics. In this research, by using a multivariate GARCH-in-Mean VAR, we try to investigate direct effects of uncertainty of oil price on macroeconomics of Iran by using annually data from 1965 to 2013.Results show that uncertainty about oil prices had a negative a...