Oil Prices and Consumer Spending: A Reprint from the "Economic Quarterly"

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DIANE Publishing, 2008 - 20 pages
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Empirical evidence suggests that oil price increases have a negative effect on spending whereas oil price declines have no effect. The estimated negative effect of an oil price increase on spending is larger if we focus on oil price increases that occur after a period of stable oil prices (net oil price increases), or if spending includes durables, the latter suggesting the possible negative influence of energy prices on the purchase of big-ticket consumption goods. Furthermore, the estimated oil price coefficients in the consumption equation do not show parameter instability during the 1980s, the period when oil prices moved widely for the first time in both directions. Charts and tables.
 

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