Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125831
Authors: 
Baumeister, Christiane
Kilian, Lutz
Year of Publication: 
2015
Series/Report no.: 
CFS Working Paper Series 525
Abstract: 
It has been forty years since the oil crisis of 1973/74. This crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks. In recent years, a large literature on the economic determinants of oil price fluctuations has emerged. Drawing on this literature, we first provide an overview of the causes of all major oil price fluctuations between 1973 and 2014. We then discuss why oil price fluctuations remain difficult to predict, despite economists' improved understanding of oil markets. Unexpected oil price fluctuations are commonly referred to as oil price shocks. We document that, in practice, consumers, policymakers, financial market participants and economists may have different oil price expectations, and that, what may be surprising to some, need not be equally surprising to others.
Subjects: 
oil market
oil price shock
heterogeneous price expectations
OPEC
peak oil
unconventional oil
JEL: 
Q43
C53
Document Type: 
Working Paper

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