Energy price shocks and medium-term business cycles

Energy price shocks pose sudden challenges to economies. This paper examines how oil price shocks have influenced the U.S. economy over the last decades and especially focuses on the productivity slowdown in the years following an oil price shock. We extend the existing literature by considering medium-term business cycles, which consist of high-frequency components (“conventional” business cycles, up to 8 years) and medium-frequency components (8-50 years). We find that the medium-frequency consequences of energy price shocks are considerable and explain a significant part of the productivity slowdown.