TY  - JOUR
AU  - Hamilton,James D.
TI  - Causes and Consequences of the Oil Shock of 2007-08
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15002
PY  - 2009
Y2  - May 2009
UR  - http://www.nber.org/papers/w15002
L1  - http://www.nber.org/papers/w15002.pdf
N1  - Author contact info:
James D. Hamilton
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-5986
Fax: 858/534-7040
E-Mail: jhamilton@ucsd.edu
AB  - This paper explores similarities and differences between the run-up of oil prices in 2007-08 and earlier oil price shocks, looking at what caused the price increase and what effects it had on the economy.  Whereas historical oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007-08 was caused by strong demand confronting stagnating world production.  Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular.  In the absence of those declines, it is unlikely that we would have characterized the period 2007:Q4 to 2008:Q3 as one of economic recession for the U.S.  The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.
ER  -