Notes and Sources

[17]  For readers interested in the international effects of higher oil prices, an International Energy Agency paper, “Impact of Higher Oil Prices on the World Economy” (2003) is available from web site www.iea. org/Textbase/publications/free_new_Desc.asp? PUBS_ID=886. 

[18]  The more that is spent back in the U.S. economy, the lower will be the net effect. If the receivers of the extra income, domestic oil companies and oil-exporting countries, do not spend it back in the U.S. economy, aggregate demand for goods and services will be reduced in the short term. Even if all additional oil revenues are spent back in the United States, there still will be distribution effects involving a move toward different categories of consumption. There will also be an indirect impact on demand for U.S. goods and services through third-country effects; when higher oil prices have negative effects on economic growth in other countries, their demand for imports from the United States will be reduced. 

[19]  See K.A. Mork, “Oil and the Macroeconomy When Prices Go Up and Down: An Extension of Hamilton’s Results,” Journal of Political Economy, Vol. 97 (1989), pp. 740-744. 

[20]  There have been several recent surveys of past research on the economic impacts of oil price shocks. See S.P.A. Brown, M.K. Yücel, and J. Thompson, “Business Cycles: The Role of Energy Prices,” in Encyclopedia of Energy, C.J. Cleveland, Ed. (New York, NY: Academic Press, 2004); S.P.A. Brown and M.K. Yucel, “Energy Prices and Aggregate Economic Activity: An Interpretative Survey,” Quarterly Review of Economics and Finance, Vol. 42 (2002), pp. 193-208; and D.W. Jones, P.N. Leiby, and I.K. Paik, “Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996,” Energy Journal, Vol. 25, No. 2 (2004). 

[21]  H.G. Huntington, The Economic Consequences of Higher Crude Oil Prices, EMF SR 9 (Stanford, CA, October 2005), web site www.stanford.edu/group/ EMF/publications/doc/EMFSR9.pdf. 

[22]  Results of Global Insight’s Macroeconomic Model of the U.S. Economy are from N. Gault, “Impacts on the U.S. Economy: Macroeconomic Models,” Presented at the Energy Modeling Forum Workshop on Macroeconomic Impacts of Oil Shocks (Arlington, VA, February 8, 2005), web site http://www.stanford.edu/group/ EMF/research/doc/gault.pdf. Federal Reserve Bank macroeconomic model results are from D. Reifschneider, R. Tetlow, and J. Williams, “Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective,” Federal Reserve Bulletin (January 1999), web site www.federalreserve.gov/ pubs/bulletin/1999/0199lead.pdf. Results from the NiGEM global macroeconomic model are from R. Barrell and O. Pomerantz, “Oil Prices and the World Economy,” National Institute of Economic and Social Research Discussion Paper 242 (London, UK, December 2004), web site www.niesr.ac.uk/pubs/dps/dp242. pdf. 

[23]  R. Jimenez-Rodriguez and M. Sanchez. “Oil Price Shocks and Real GDP Growth: Empirical Evidence for Some OECD Countries,” Applied Economics, Vol. 37, No. 2 (February 2005), pp. 201-228. 

[24]  H.G. Huntington, “Energy Disruptions, Interfirm Price Effects and the Aggregate Economy,” Energy Economics, Vol. 25, No. 2 (March 2003), pp. 119-136.