Energy Business Cycles

34 Pages Posted: 22 Jan 2016 Last revised: 18 Mar 2020

See all articles by David Meenagh

David Meenagh

Cardiff University Business School

Patrick Minford

Cardiff University Business School; Centre for Economic Policy Research (CEPR)

Olayinka Oyekola

University of Exeter INTO

Date Written: November 1, 2015

Abstract

We provide a structural investigation and interpretation of the questions: What is the origin of business cycle fluctuations? What is the main source of recessions, in particular, since the early 1970s? Are there energy business cycles? Indirect Inference estimation of a two-sector dynamic stochastic general equilibrium (DSGE) model with energy use in production is employed for this purpose, with a historical decomposition of output used to summarise our findings. According to the estimated model, the contribution of energy price shocks itself to the last five US recessions is small and negligible. Whereas, over the same 1970-2012 period, sectoral energy-input efficiency shocks and the exogenous world price of imported energy-intensive goods play dominant roles in causing declines in output.

Keywords: Two sector, US DSGE model, Oil price volatility, Open economy, Indirect inference

JEL Classification: E32, D58, F41, C52, Q43

Suggested Citation

Meenagh, David and Minford, Patrick and Oyekola, Olayinka, Energy Business Cycles (November 1, 2015). Available at SSRN: https://ssrn.com/abstract=2719349 or http://dx.doi.org/10.2139/ssrn.2719349

David Meenagh

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 5198 (Phone)
+44 29 2087 4419 (Fax)

Patrick Minford

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 5728 (Phone)
+44 29 2087 4419 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Olayinka Oyekola (Contact Author)

University of Exeter INTO ( email )

Stocker Rd
Exeter, EX4 4PY
United Kingdom

HOME PAGE: http://www.olayinkaoyekola.com

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
33
Abstract Views
420
PlumX Metrics