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OIL PRICE VOLATILITY: INDUSTRIAL PRODUCTION AND SPECIAL AGGREGATES

Published online by Cambridge University Press:  30 October 2017

John Elder*
Affiliation:
Colorado State University
*
Address correspondence to: John Elder, Department of Finance & Real Estate, Colorado State University, 1272 Campus Delivery, Fort Collins, CO 80523-1272USA; email: John.elder@colostate.edu.

Abstract

Previous research shows that volatility in oil prices has tended to depress output, as measured by nonresidential investment, gross domestic product, and aggregated measures of industrial production in several countries. This paper investigates the effect of oil price volatility on disaggregated measures of industrial production. The disaggregated measures that we examine are the special aggregates by market groups as calculated by the Federal Reserve Board. Our results are reported for three categories of special aggregates: indexes for industrial production excluding two major industries (technology and motor vehicles), energy-related special aggregates, and non-energy-related special aggregates. Our results indicate that among energy-related market groups, the effects of oil price volatility are concentrated in activities related to primary energy generation and oil and gas drilling. Among non-energy-related market groups, oil price volatility affects a broad range of special aggregates, including aggregates sorted by consumer goods and business equipment.

Type
Articles
Copyright
Copyright © Cambridge University Press 2017 

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