Publications

Articles in Peer-Reviewed Journals

Abstract

The economic implications of oil price shocks have been extensively studied since the 1970s. Despite this huge literature, no dynamic stochastic general equilibrium model was available that captures two well- known stylized facts: (1) the stagflationary impact of an oil price shock, together with (2) the influence of the energy efficiency of capital on the depth and length of this impact. We build, estimate and simulate a New-Keynesian model with capital accumulation, which takes the case of an economy where oil is imported from abroad, and where these stylized facts can be accounted for. Moreover, the Bayesian estimation of the model on the US economy (1984–2007) suggests that the output elasticity of oil might have been above 10%, stressing the role of oil use in US growth at this time. Finally, our simulations confirm that an increase in energy efficiency significantly attenuates the effects of an oil shock—a pos- sible explanation of why the third oil shock (1999–2008) did not have the same macro-economic impact as the first two ones. These results suggest that oil consumption and energy efficiency have been two major engines for US growth in the last three decades.


Working Papers

Abstract

The consequences of oil price shocks in the real economy have preoccupied economists since the 1970s and the absence of a reaction has stunned them in the 2000s. However, despite the huge literature devoted to the subject, no dynamic stochastic general equilibrium (DSGE) model has been able to capture, all at the same time, four of the well-known stylized effects observed after the oil price increase of the 2000s: the absence of recession, coupled with a low but persistent increase in the inflation rate, a decrease in real wages and low price elasticity of oil demand in the short run. One of the reasons is that theoretical papers assume a high degree of substitutability between oil and other factors, an assumption that is not backed up empirically. This paper enlarges the dsge model developed in Acurio-Vásconez et al. (2015) by introducing imperfect substitutability between oil and other factors. The Bayesian estimation of the model over the period 1984:Q1-2007:Q3 suggests that the elasticities of substitution of oil are 0.086 in production and 0.014 in consumption. Furthermore, a sensitivity analysis of the estimated model points towards two main policy conclusions: (a) a stronger anti-inflationary Taylor rule can lead to a recession after an oil shock and; (b) wage flexibility could create a stronger increase in inflation and provoke a decrease in domestic consumption. This latter result contradicts the conclusions of Blanchard and Galí (2009) and Blanchard and Riggi (2013).

Abstract

The effects of oil shocks in inflation and growth have been widely discussed in the literature, however few have focused on the impact of oil price increases on unemploy- ment. In order to shed some light on this problem, this paper develops a medium scale Dynamic Stochastic General Equilibrium model (dsge) that allows for oil utilization in production and consumption as in Acurio-Vásconez (2015); unemployment as in Mortensen & Pissarides (1994); and staggered nominal wage contracting as in Gertler & Trigari (2009). It then analyzes the effects of oil price increases on the economy. The model recovers most of the well-known stylized facts observed after the oil shock in the 2000s’. A sensitivity analysis shows that the reduction of the bargaining power of households to negotiate wage contracts reduces the impact of an oil shock in unem- ployment, without affecting negatively gdp. However, it also shows that the reduction of bargaining power, together with wage flexibility strongly reduces the increase in unemployment after an oil shock, but causes a decrease in real wages, which reduces household income and affects GDP.


Work in Progress:

  • "Oil Dependence and Oil Shocks Impacts: Europe vs United States "
  • "A DSGE Model for a Energy Producer Country"
  • "Pollution, Capital Depreciation and Growth"
  • "The Effects of the Energy Transition on Unemployment"
  • "Could Structural Change Explain the Dynamics of Worked Hours?"