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Report
Reassessing the U.S. Economy’s Vulnerability to Oil Shocks
The impact of today’s oil price shocks may differ markedly from those of shocks in the 1970s. As noted in the minutes of the April 28–29, 2026, Federal Open Market Committee meeting, two structural changes to the U.S. economy could cushion the impact: the substantial increase in domestic oil production and the declining share of spending devoted to energy. This brief examines empirical evidence on how these transformations have altered the U.S. economy’s vulnerability to oil shocks.
Oil Prices and Container Shipping Costs
Oil-price shocks are also fuel- and shipping-cost shocks, but their effect can vary depending on a container ship’s age, size and how long it spends at sea.
Working Paper
Binary Conditional Forecasts
While conditional forecasting has become prevalent both in the academic literature and in practice (e.g., bank stress testing, scenario forecasting), its applications typically focus on continuous variables. In this paper, we merge elements from the literature on the construction and implementation of conditional forecasts with the literature on forecasting binary variables. We use the Qual-VAR [Dueker (2005)], whose joint VAR-probit structure allows us to form conditional forecasts of the latent variable which can then be used to form probabilistic forecasts of the binary variable. We apply ...
Working Paper
Binary Conditional Forecasts
While conditional forecasting has become prevalent both in the academic literature and in practice (e.g., bank stress testing, scenario forecasting), its applications typically focus on continuous variables. In this paper, we merge elements from the literature on the construction and implementation of conditional forecasts with the literature on forecasting binary variables. We use the Qual-VAR [Dueker (2005)], whose joint VAR-probit structure allows us to form conditional forecasts of the latent variable which can then be used to form probabilistic forecasts of the binary variable. We apply ...
Working Paper
Branching Networks and Geographic Contagion of Commodity Price Shocks
This paper studies the role of banks' branching networks in propagating the oil shocks. Banks that were exposed to the oil shocks through their operations in oil-concentrated counties experienced a liquidity drainage in the form of a declining amount of demand deposit inflow as well as an increasing percentage of troubled loans. Banks were forced to sell liquid assets, and contracted lending to small businesses and mortgage borrowers in counties that were not directly affected by the oil shocks. The effect is magnified when banks do not have strong community ties, but is mitigated if banks' ...