Title: The macroeconomic effects of oil supply news: Evidence from OPEC announcements
Authors: Diego Kaenzig - London Business School (United Kingdom) [presenting]
Abstract: A novel approach is proposed to study the macroeconomic effects of oil prices, exploiting institutional features of OPEC and high-frequency data. Using variation in futures prices around OPEC announcements as an instrument, we identify an oil supply news shock. These shocks have statistically and economically significant effects. Negative news leads to an immediate increase in oil prices, a gradual fall in oil production and an increase in inventories. This has consequences for the U.S. economy: activity falls, prices and inflation expectations rise, and the dollar depreciates - providing evidence for a strong channel operating through supply expectations.