Subash Bhandari

Job Market Paper: “ How OPEC Oil Shocks Shape U.S. CPI Inflation: Evidence from an IV-SVAR Approach", with Hyeongwoo Kim "Click here... 

Abstract: This paper investigates the transmission of structural global oil market shocks to U.S. in- flation using an instrumental variable structural vector autoregression (IV-SVAR) applied to highly disaggregated Consumer Price Index (CPI) components. We consider two types of shocks: oil supply shocks, arising from OPEC production disruptions, and oil supply news shocks, reflecting expecta- tions of future production changes. The inflationary effects are concentrated in energy-related goods, significantly driving headline CPI, while non-necessity components exhibit muted or even negative responses. Moreover, news shocks generate short-lived, front-loaded effects, whereas supply shocks produce more persistent impacts.

“Shale Boom and the Responsiveness of U.S. Oil Production to Global Oil Market Shocks" Click Here.. 

Abstract: This paper examines how U.S. oil production responds to oil market shocks in a struc- tural vector autoregression (SVAR) framework. Using recursive setting, I identify three oil market shocks: flow supply shock, flow demand shock, and oil specific shock. My empirical analysis suggests that U.S. shale production is uniquely responsive, offsetting roughly one-fifth of the initial decline in non- U.S. output following a negative supply shock. Extending the analysis to aggregate production and rig counts from the seven major shale regions reveals qualitatively similar patterns, with drilling activity responding more rapidly than output. Additional evidence from drilling, completions, and drilled-but-uncompleted wells (DUCs) highlights the operational mechanisms underpinning produc- tion gains, while basin level estimates show that responses are concentrated in oil focused regions such as the Permian, Bakken, and Eagle Ford.  

“The Effect of OPEC Shocks on Producer Prices in the United States"

Abstract: This paper examines how exogenous shocks originating from the Organization of Petroleum Exporting Countries (OPEC) influence U.S. producer prices. Using an instrumental variable struc- tural vector autoregression (IV-SVAR) framework, I distinguish between two types of shocks: oil sup- ply shocks stemming from OPEC production disruptions caused by military or political events, and oil supply news shocks capturing changes in market expectations of future production following OPEC announcements. My empirical analysis suggests that both shocks significantly raise overall producer prices, primarily through higher fuel and power costs. The largest effects occur in energy-intensive industries such as chemicals and non-metallic minerals, as well as petrochemical sectors like rubber and plastics, while other sectors experience relatively muted impacts.

“Implication of Oil Market Shocks on U.S. Non-farm Total Factor Productivity" with Henry Thompson and Nazif Durmaz

Abstract: In this study, we empirically assess the causal impact of oil price fluctuation on U.S. non- farm productivity. We build on Kilian (2009) to identify three different shocks of oil market shocks: flow supply shock, flow demand shock and oil specific shock. Additionally, we explore the transmission mechanism of oil market shocks by estimating the impact on labor and capital. Our key findings is that oil specific demand shock has most significant impact on hours worked as well as utilization rate. This implies that both labor and capital inputs increase in response to oil price increase following oil specific shock.