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Oil Prices and Economic Activity: Is the Relationship Symmetric?

This paper presents some evidence of an asymmetric effect of oil price spikes upon the U.S. economy. It appears that price increases may be associated with reductions in economic activities, while price decreases do not display a distinct relationship with the economy.Possible explanations for these results are offered.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy and the Environment – Climate Change and Greenhouse Gases

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q54 - Climate; Natural Disasters and Their Management; Global Warming

Keywords: Oil price shocks, Asymmetry, US, Energy policy

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No4-10

Published in Volume14, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.