Increases in oil prices have been blamed for several recessi
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Increases in oil prices have been blamed for several recessions in developed countries. To quantify the effect of oil pr
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Increases in oil prices have been blamed for several recessions in developed countries. To quantify the effect of oil prices on real economic activity, researchers have run regressions like those discussed in this chapter. Let GDPt denote the value of quarterly gross domestic product in the United States and let Yt = 100ln(GDPt>GDPt - 1) be the quarterly percentage change in GDP. James Hamilton, an econometrician and macroeconomist, has suggested that oil prices adversely affect that economy only when they jump above their values in the recent past. Specifically, let Ot equal the greater of zero or the percentage point difference between oil prices at date t and their maximum value during the past 3 years. A distributed lag regression relating Yt and Ot, estimated over 1960:Q1
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