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Federal Reserve Bank of Dallas
Working Papers
Oil price shocks and the U.S. economy: where does the asymmetry originate?
Nathan S. Balke
Stephen P. A. Brown
Mine Yücel
Abstract

Rising oil prices appear to retard aggregate U.S. economic activity by more than falling oil prices stimulate it. Past research suggests adjustment costs and/or monetary policy may be possible explanations ofthe asymmetric response. This paper uses a quasi-vector autoregressive model of U. S. economy to examine from where the asymmetry might originate. The analysis uses counterfactual impulse response experiments to detennine that monetary policy alone cannot account for the asymmetry. The robustness ofshort-lived asymmetry across the base case and counterfactuals is consistent with the adjustment-cost explanation.


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Nathan S. Balke & Stephen P. A. Brown & Mine Yücel, Oil price shocks and the U.S. economy: where does the asymmetry originate?, Federal Reserve Bank of Dallas, Working Papers 9911, 1999.
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Note: Published as: Balke, Nathan S., Stephen P.A. Brown and Mine K. Yücel (2002), "Oil Price Shocks and the U.S. Economy: Where Does the Asymmetry Originate?," The Energy Journal 23 (3): 27-52.
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