mardi 14 avril 2015
Supply or Demand? The IMF Breaks Down the Collapse of Oil Prices
Posted on 07:53 by nice news
One of the most important questions for economists about the past year’s collapse in oil prices is whether it was driven by supply or demand.
If the price drop was caused by increased supply, then it’s good news for the economy as prices fell simply because oil is available in more abundance. If prices fell because demand in the economy was weak, it would be bad news, signaling the economy’s fundamentals were deteriorating.
In its latest World Economic Outlook, economists at the International Monetary Fund tackled the question. Their conclusion: It started out as a bad-news demand story, but turned into the good-news supply story.
It’s long been clear to most economists that both supply and demand played some role in the price plunge. Estimates of global economic growth were slowing just as oil production in the U.S. was skyrocketing to new highs.
To disentangle which factor was more important, the IMF looked at the change in global stock prices and oil prices every day and made an interesting set of assumptions: If stock prices and oil prices both decline, it suggests something unhealthy in the economy — or weak demand. If oil prices fall, but stock prices rise, it sugge
If the price drop was caused by increased supply, then it’s good news for the economy as prices fell simply because oil is available in more abundance. If prices fell because demand in the economy was weak, it would be bad news, signaling the economy’s fundamentals were deteriorating.
In its latest World Economic Outlook, economists at the International Monetary Fund tackled the question. Their conclusion: It started out as a bad-news demand story, but turned into the good-news supply story.
It’s long been clear to most economists that both supply and demand played some role in the price plunge. Estimates of global economic growth were slowing just as oil production in the U.S. was skyrocketing to new highs.
To disentangle which factor was more important, the IMF looked at the change in global stock prices and oil prices every day and made an interesting set of assumptions: If stock prices and oil prices both decline, it suggests something unhealthy in the economy — or weak demand. If oil prices fall, but stock prices rise, it sugge
Supply or Demand? The IMF Breaks Down the Collapse of Oil Prices
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