Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Macroeconomics

Editor-in-Chief: Cavalcanti, Tiago / Kambourov, Gueorgui

Ed. by Abraham, Arpad / Carceles-Poveda , Eva / Debortoli, Davide / Lambertini, Luisa / Nimark, Kristoffer / Wang, Pengfei

2 Issues per year

IMPACT FACTOR 2016: 0.043
5-year IMPACT FACTOR: 0.376

CiteScore 2017: 0.62

SCImago Journal Rank (SJR) 2017: 0.553
Source Normalized Impact per Paper (SNIP) 2017: 0.605

See all formats and pricing
More options …

The Response of Business Fixed Investment to Changes in Energy Prices: A Test of Some Hypotheses about the Transmission of Energy Price Shocks

Paul Edelstein / Lutz Kilian
Published Online: 2007-11-07 | DOI: https://doi.org/10.2202/1935-1690.1607

Changes in firms' investment expenditures are considered one of the primary channels through which energy price shocks are transmitted to the economy. It is widely believed that the response of business fixed investment to energy price increases differs from its response to energy price decreases. We show that the apparent symmetry in the estimated responses of business fixed investment in equipment and structures cannot be reconciled with standard theoretical explanations of asymmetric responses. Rather this evidence is an artifact (1) of the aggregation of mining-related expenditures by the oil, natural gas, and coal mining industry and all other expenditures, and (2) of ignoring an exogenous shift in investment caused by the 1986 Tax Reform Act. After controlling for these factors, formal statistical tests are unable to reject the hypothesis of symmetric responses to energy price shocks for all components of investment in structures. For nonresidential equipment there is weak statistical evidence of classical asymmetries in some components, but not in the aggregate. Once symmetry is imposed and mining-related expenditures are excluded, the estimated response of business fixed investment in equipment and structures tends to be small and statistically insignificant. Historical decompositions show that energy price shocks have played a minor role in driving fluctuations in nonresidential fixed investment other than investment in mining.

Keywords: oil price shocks; nonresidential fixed investment; structures; equipment; asymmetric responses

About the article

Published Online: 2007-11-07

Citation Information: The B.E. Journal of Macroeconomics, Volume 7, Issue 1, ISSN (Online) 1935-1690, DOI: https://doi.org/10.2202/1935-1690.1607.

Export Citation

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston.Get Permission

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Nathan S. Balke and Stephen P.A. Brown
Energy Policy, 2018, Volume 116, Page 357
Journal of Money, Credit and Banking, 2017, Volume 49, Number 8, Page 1747
Abbas Valadkhani and Russell Smyth
Energy Economics, 2017, Volume 67, Page 83
Neophytos Lambertides, Christos S. Savva, and Dimitris A. Tsouknidis
Journal of International Money and Finance, 2017, Volume 74, Page 137
César Castro, Rebeca Jiménez-Rodríguez, Pilar Poncela, and Eva Senra
Economia Politica, 2017, Volume 34, Number 1, Page 55
Rajesh H Acharya and Anver C Sadath
OPEC Energy Review, 2016, Volume 40, Number 3, Page 300
Zeina Alsalman Ana Mar�a Herrera
The Energy Journal, 2015, Volume 36, Number 3
Marc Joëts
European Journal of Operational Research, 2015, Volume 247, Number 1, Page 204
Ana María Herrera, Latika Gupta Lagalo, and Tatsuma Wada
Macroeconomic Dynamics, 2011, Volume 15, Number S3, Page 472
Lutz Kilian and Robert J. Vigfusson
Macroeconomic Dynamics, 2011, Volume 15, Number S3, Page 337
John Elder and Apostolos Serletis
Macroeconomic Dynamics, 2011, Volume 15, Number S3, Page 379
Paul Edelstein and Lutz Kilian
Journal of Monetary Economics, 2009, Volume 56, Number 6, Page 766
Lutz Kilian and Robert J. Vigfusson
Quantitative Economics, 2011, Volume 2, Number 3, Page 419
Rebeca Jiménez-Rodríguez
Empirical Economics, 2015, Volume 48, Number 3, Page 1079
Journal of Money, Credit and Banking, 2010, Volume 42, Number 7, Page 1419
Lutz Kilian and Cheolbeom Park
International Economic Review, 2009, Volume 50, Number 4, Page 1267
Lutz Kilian
Annual Review of Resource Economics, 2014, Volume 6, Number 1, Page 133
Goodness C. Aye, Vincent Dadam, Rangan Gupta, and Bonginkosi Mamba
Energy Economics, 2014, Volume 43, Page 41
Paresh Kumar Narayan and Susan Sunila Sharma
Economic Modelling, 2014, Volume 38, Page 142
Po-Chin Wu, Shiao-Yen Liu, and Sheng-Chieh Pan
The Journal of International Trade & Economic Development, 2015, Volume 24, Number 1, Page 24
Matthias Gubler and Matthias S. Hertweck
Journal of International Money and Finance, 2013, Volume 37, Page 324
Konstantinos Drakos and Panagiotis Th. Konstantinou
Journal of Applied Econometrics, 2013, Volume 28, Number 1, Page 151
Kyung Hwan Yoon and Ronald A. Ratti
Energy Economics, 2011, Volume 33, Number 1, Page 67
Rebeca Jiménez-Rodríguez
Energy Economics, 2008, Volume 30, Number 6, Page 3095
Ronald A. Ratti, Youn Seol, and Kyung Hwan Yoon
Energy Economics, 2011, Volume 33, Number 5, Page 721
Ana Gómez-Loscos, María Dolores Gadea, and Antonio Montañés
Applied Economics, 2012, Volume 44, Number 35, Page 4575
Journal of Money, Credit and Banking, 2010, Volume 42, Number 6, Page 1137

Comments (0)

Please log in or register to comment.
Log in