An interpretative survey of oil price-GDP elasticities

Abstract

In the context of rising crude oil prices observed in the last five years, this paper attempts to shed light on the possible consequences of a costlier barrel. We shall begin with a brief presentation of the main results of the analyses conducted in the last 30 years, concerning the impact of energy prices on economic activity. We shall then interpret these analyses and their conclusions in a frequencies framework by distinguishing between the impact of an upward disequilibrium and an upturn in the equilibrium of the oil prices. We shall try to draw a number of lessons about the anticipated effects of the recent trend in energy prices. Copyright © 2007, Institut français du pétrole.