Gasoline Prices, Transport Costs, and the U.S. Business Cycles

28 Pages Posted: 20 Dec 2011 Last revised: 22 Nov 2016

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: June 1, 2014

Abstract

The effects of gasoline prices on the U.S. business cycles are investigated. In order to distinguish between gasoline supply and gasoline demand shocks, the price of gasoline is endogenously determined through a transportation sector that uses gasoline as an input of production. The model is estimated for the U.S. economy using five macroeconomic time series, including data on transport costs and gasoline prices. The results show that although standard shocks in the literature (e.g., technology shocks, monetary policy shocks) have significant effects on the U.S. business cycles in the long run, gasoline supply and demand shocks play an important role in the short run.

Suggested Citation

Yilmazkuday, Hakan, Gasoline Prices, Transport Costs, and the U.S. Business Cycles (June 1, 2014). Journal of Economic Dynamics and Control, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1974165 or http://dx.doi.org/10.2139/ssrn.1974165

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

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