Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111681
Authors: 
Arora, Vipin
Year of Publication: 
2015
Series/Report no.: 
Economics Discussion Papers 2015-48
Abstract: 
The author argues that the economic benefits of low gasoline prices for the U.S. economy have fallen substantially since the reemergence of America as a major oil producer. The old rule-ofthumb that a 10% fall in the oil price raises inflation-adjusted U.S. GDP by 0.2% is too large - the impact on economic activity should be closer to zero, and may even be negative if consumption grows slowly. The reasons for this change are straightforward, if underappreciated: (i) the value of oil production accounts for a larger share of the U.S. economy; and (ii) consumers are not spending the windfall like they used to because of higher debt levels, limited access to credit, slow wage growth, and an older population.
Subjects: 
oil price
economic activity
input-output
consumption
JEL: 
C67
E20
E60
Q43
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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