Essays On The Impact Of Oil Price Shocks On The Macroeconomy

ABSTRACT ESSAYS O THE IMPACT OF OIL PRICE SHOCKS O THE Advisor: Dr. Ana María Herrera Major: Economics Degree: Doctor of Philosophy MACROECOOMY by LATIKA GUPTA LAGALO December 2011 This dissertation analyzes the relationship between oil price and industrial production. use recently developed methods and techniques to investigate the functional form and structural stability of the relationship between oil prices and industrial production. In my first chapter, I use both slope-based tests and impulse response based tests to provide evidence of nonlinearity in the response of U.S. industrial production to oil price shocks My second essay further empirically assesses the presence (or absence) of asymmetry in the response of industrial production to real oil price shocks using a sample of 18 industrialized economies using various nonlinear transformations of the price of oil. In my third essay I examine the impact of demand and supply shocks in the crude oil marke on industrial production in the U.S. as opposed to treating oil price shocks as exogenous.