Oil Prices and Consumption Across Countries and U.S. States
36 Pages Posted: 27 Nov 2019 Last revised: 29 Apr 2020
Date Written: November, 2019
We study the effects of oil prices on consumption across countries and U.S. states, by exploiting the time-series and cross-sectional variation in oil dependency of these economies. We build two large datasets: one with 55 countries over the years 1975-2018, and another with all U.S. states over the period 1989-2018. We then show that oil price declines generate positive effects on consumption in oil-importing economies, while depressing consumption in oil-exporting economies. We also document that oil price increases do more harm than the good afforded by oil price decreases both in the world and U.S. aggregates.
JEL Classification: E32, F40, Q43
Suggested Citation: Suggested Citation