Should Oil Prices Receive So Much Attention? An Evaluation of the Predictive Power of Oil Prices for the U.S. Economy.

This paper evaluates the potential gains from using oil prices to forecast a variety of measures of inflation, economic activity, and monetary policy—related variables. With a few exceptions, oil prices do not have any predictive content for these variables. This finding is robust to the use of roll...

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Published in:Economic Inquiry Vol. 46; no. 4; pp. 528 - 540
Main Authors: Bachmeier, Lance, Li, Qi, Liu, Dandan
Format: Article
Published: Wiley-Blackwell October 2008
Subjects:
Online Access:View this record in EBSCOhost
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        atl: Should Oil Prices Receive So Much Attention? An Evaluation of the Predictive Power of Oil Prices for the U.S. Economy.
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          Bachmeier, Lance
          Li, Qi
          Liu, Dandan
      su:
        Mathematical models
        Petroleum product sales & prices
        United States economy
        Petroleum sales & prices
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        subj:
          Mathematical models
          Petroleum product sales & prices
          United States economy
          Petroleum sales & prices
      ab: This paper evaluates the potential gains from using oil prices to forecast a variety of measures of inflation, economic activity, and monetary policy—related variables. With a few exceptions, oil prices do not have any predictive content for these variables. This finding is robust to the use of rolling forecast windows, the use of industry-level data, changes in the forecast horizon, and allowing for nonlinearities. (JEL Q43, E37, C32) Reprinted by permission of the publisher.
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    language: English
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