Gasoline prices,transport costs,and the U.S. business cycles |
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| Affiliation: | 1. University of Bayreuth, Department of Economics, RW1, Universitätsstrasse 30, Bayreuth 95447, Germany;2. Florida International University, Department of Economics, 11200 SW 8th Street, Miami 33199, FL, USA;1. School of Finance, Shanghai University of Finance and Economics, 777 Guoding Road, Shanghai 200433, China;2. DeGroote School of Business, McMaster University, Canada;3. China Academy of Financial Research, Shanghai Jiao Tong University, 211 West Huaihai Road, Shanghai 200030, China |
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| Abstract: | The effects of gasoline prices on the U.S. business cycles are investigated. In order to distinguish between gasoline supply and gasoline demand shocks, the price of gasoline is endogenously determined through a transportation sector that uses gasoline as an input of production. The model is estimated for the U.S. economy using five macroeconomic time series, including data on transport costs and gasoline prices. The results show that although standard shocks in the literature (e.g., technology shocks, monetary policy shocks) have significant effects on the U.S. business cycles in the long run, gasoline supply and demand shocks play an important role in the short run. |
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| Keywords: | Business cycles Transport costs Gasoline prices |
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