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Can oil shocks explain asymmetries in the US Business Cycle?

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Abstract.

We consider whether oil prices can account for business cycle asymmetries. We test for asymmetries based on the Markov switching autoregressive model popularized by Hamilton (1989), using the tests devised by Clements and Krolzig (2000). We find evidence against the conventional wisdom that recessions are more violent than expansions: while some part of the downturn in economic activity that characterises recessionary periods can be attributed to dramatic changes in the price of oil, post-War US economic growth is characterized by the steepness of expansions.

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Authors and Affiliations

  1. University of Warwick, Dept. of Economics, CV4 7AL Coventry, U.K. (e-mail: m.p.clements@warwick.ac.uk), , , , , , GB

    Michael P. Clements

  2. Oxford University, Department of Economics, Manor Road Building, Oxford, OX1 3UQ and Nuffield College (e-mail: hans-martin.krolzig@nuf.ox.ac.uk), , , , , , GB

    Hans-Martin Krolzig

Authors
  1. Michael P. Clements
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  2. Hans-Martin Krolzig
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First Version Received: December 2000/Final Version Received: September 2001

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Clements, M., Krolzig, HM. Can oil shocks explain asymmetries in the US Business Cycle?. Empirical Economics 27, 185–204 (2002). https://doi.org/10.1007/s001810100114

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  • DOI: https://doi.org/10.1007/s001810100114

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