{
  "title": "Oil Prices and the Global Economy: Is It Different This Time Around?",
  "publication": "IMF Working Papers, November 8, 2016",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/oil-prices-and-the-global-economy-is-it-different-this-time-around-44377",
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  "summary": "The recent plunge in oil prices has brought into question the generally accepted view that lower oil prices are good for the United States and the global economy.",
  "sections": [
    {
      "heading": "Summary findings from the multi-country econometric model",
      "content": "- A fall in oil prices tends relatively quickly to lower interest rates in most countries.\n- A fall in oil prices tends relatively quickly to lower inflation in most countries.\n- A fall in oil prices tends relatively quickly to increase global real equity prices.\n- Effects on real output are positive, but take longer to materialize (around four quarters after the shock).\n- Overall conclusion: oil markets equilibrate but rather slowly, with large episodic swings between low and high oil prices."
    },
    {
      "heading": "U.S. economy — monthly evidence and relationships",
      "content": "- Re-examination uses monthly observations on real oil prices, real equity prices, and real dividends.\n- Confirms a perverse positive relationship between oil and equity prices over the period since the 2008 financial crisis (as highlighted in recent literature).\n- Finds this positive oil–equity relationship to be unstable when considered over the longer time period of 1946–2016.\n- Finds a stable negative relationship between oil prices and real dividends over the sample; real dividends are argued to be a better proxy for economic activity than equity prices."
    },
    {
      "heading": "Supply-side effects across oil producers",
      "content": "- Effects of lower oil prices differ widely across different oil producers.\n- Initial effects could be perverse in some major oil producers, as they may try to compensate revenue losses by raising production."
    },
    {
      "heading": "Market dynamics and adjustment",
      "content": "- Demand and supply adjustments to oil price changes taken together imply slow equilibration of oil markets.\n- Oil markets exhibit large episodic swings between low and high oil prices."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Pages: 28\n- Volume: 2016\n- Issue: 210\n- Series: Working Paper No. 2016/210\n- DOI: https://doi.org/10.5089/9781475552034.001\n- Stock No: WPIEA2016210\n- ISBN: 9781475552034\n- ISSN: 1018-5941\n\nKamiar Mohaddes and M. Hashem Pesaran, \"Oil Prices and the Global Economy: Is It Different This Time Around?\", IMF Working Paper No. 2016/210 (November 8, 2016).\n\n---\n\n Content in this bundle\n\n- Oil Prices and the Global Economy: Is It Different This Time Around?\n  - Oil Prices and the Global Economy: Is It Different This Time Around? (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Oil Prices and the Global Economy: Is It Different This Time Around? (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/oil-prices-and-the-global-economy-is-it-different-this-time-around-44377"
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    "Authors: Kamiar Mohaddes, M. Hashem Pesaran",
    "Published: November 8, 2016",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475552034.001",
    "A fall in oil prices tends relatively quickly to lower interest rates in most countries.",
    "A fall in oil prices tends relatively quickly to lower inflation in most countries.",
    "A fall in oil prices tends relatively quickly to increase global real equity prices.",
    "Effects on real output are positive, but take longer to materialize (around four quarters after the shock).",
    "Overall conclusion: oil markets equilibrate but rather slowly, with large episodic swings between low and high oil prices.",
    "Re-examination uses monthly observations on real oil prices, real equity prices, and real dividends.",
    "Confirms a perverse positive relationship between oil and equity prices over the period since the 2008 financial crisis (as highlighted in recent literature).",
    "Finds this positive oil–equity relationship to be unstable when considered over the longer time period of 1946–2016.",
    "Finds a stable negative relationship between oil prices and real dividends over the sample; real dividends are argued to be a better proxy for economic activity than equity prices.",
    "Effects of lower oil prices differ widely across different oil producers.",
    "Initial effects could be perverse in some major oil producers, as they may try to compensate revenue losses by raising production.",
    "Demand and supply adjustments to oil price changes taken together imply slow equilibration of oil markets.",
    "Oil markets exhibit large episodic swings between low and high oil prices.",
    "Pages: 28",
    "Volume: 2016",
    "Issue: 210",
    "Series: Working Paper No. 2016/210",
    "DOI: https://doi.org/10.5089/9781475552034.001",
    "Stock No: WPIEA2016210",
    "ISBN: 9781475552034",
    "ISSN: 1018-5941",
    "**Oil Prices and the Global Economy: Is It Different This Time Around?**"
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