Norges Bank

Working Paper

The shale oil boom and the U.S. economy: Spillovers and time-varying effects

Author:
Hilde C. Bjørnland and Julia Zhulanova
Series:
Working Paper
Number:
14/2019

We analyze if the transmission of oil price shocks on the U.S. economy has changed with the shale oil boom. To do so, we put forward a framework that allows for spillovers between industries and learning by doing (LBD) over time. We identify these spillovers using a time-varying parameter factor-augmented vector autoregressive (VAR) model with both state level and country level data. In contrast to previous results, we fi nd considerable changes in the way oil price shocks are transmitted to the U.S economy: there are now positive spillovers to non-oil investment, employment and production from an increase in the oil price - effcts that were not present before the shale oil boom.

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ISSN 1502-8190 (online)

Published 21 August 2019 13:00
Published 21 August 2019 13:00