Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162457
Authors: 
Güntner, Jochen H. F.
Linsbauer, Katharina
Year of Publication: 
2016
Series/Report no.: 
Working Paper, Department of Economics, Johannes Kepler University of Linz 1614
Abstract: 
This paper investigates how the University of Michigan's Index of Consumer Sentiment (ICS) - a survey measure of U.S. households' expectations about current and future economic conditions - responds to structural oil supply and demand shocks. We find that the response to an observed increase in the real price of crude oil depends on the underlying reason. While oil supply shocks have little effect on the ICS, other oil demand shocks such as a precautionary demand shock, for example, have a statistically significant negative impact over a two-year horizon. The effect of aggregate demand shocks associated with the global business cycle is positive in the first few months and negative thereafter. Considering the responses of ICS sub-indices and more specific survey questions, we find that expectations about higher future inflation and the associated reduction of real household income as well as a deterioration of perceived vehicle and house buying conditions are the main transmission channels of aggregate demand and other oil demand shocks. Oil shocks also affect consumers' satisfaction with U.S. economic policy.
Subjects: 
Consumer sentiment
Oil price shocks
Structural VAR estimation
Transmission channels
JEL: 
C32
E30
N50
Q41
Document Type: 
Working Paper

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