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Impacts of Oil Price Shocks on the United States Economy: A Meta-analysis of the Oil Price Elasticity of Gdp for Net Oil-importing Economies

by Gbadebo A Oladosu, Paul N Leiby, David C Bowman, Rocio Uria Martinez, Megan M Johnson
Publication Type
Journal Name
Energy Policy
Publication Date
Page Numbers
523 to 544

Policy makers are interested in estimates of the potential damage to the economy from oil price shocks, particularly during periods of rapid and large increases that accompany severe supply shocks.
Literature estimates of the economic impacts of oil price shocks, summarized by the oil price elasticity of the GDP, span a very wide range due to both fundamental economic and methodological factors. This study presents the first, to our knowledge, quantitative meta-analysis of the oil price elasticity of GDP for net oil importing countries, with a focus on the United States (US). The range of estimates of the oil price
elasticity of GDP for the US in the data for this study is -0.124 to +0.017. We employ a meta-regression model that controls for key factors behind the variations in literature estimates to estimate the mean and
variance of the GDP elasticity across studies. We use a robust estimation technique to deal with heterogeneity of the data and well-known econometric issues that confront meta-analysis. The resulting regression model was used to estimate the oil price elasticity of GDP for the United States, with a mean of -0.024 and 68% confidence interval of -0.035 to 0.005, four quarters after a shock.