Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/197866 
Year of Publication: 
2018
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2018-13
Publisher: 
Bank of Canada, Ottawa
Abstract: 
The impact of oil price shocks on the U.S. economy is a topic of considerable debate. In this paper, we examine the response of U.S. consumers to the 2014-2015 negative oil price shock using representative survey data from the Consumer Expenditure Survey. We propose a difference-in-difference identification strategy based on two factors, vehicle ownership and gasoline reliance, which generate variation in exposure to oil price shocks across consumers. Our findings suggest that exposed consumers significantly increased their spending relative to non-exposed consumers when oil prices fell, and that the average marginal propensity to consume out of gasoline savings was above 1. Across products, we find that consumers increased spending especially on transportation goods and non-essential items.
Subjects: 
Business fluctuations and cycles
Domestic demand and components
Recent economic and financial developments
JEL: 
D12
E21
Q43
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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