An estimation of oil prices effect on household consumption in Sweden
Abstract: This study uses a vector autoregressive (VAR) model to examine the impact of oil prices on household final consumption expenditure in Sweden. Due to that international oil prices have been falling since mid-2014, and due to Sweden’s assumed decreased oil dependency, it is of interest to estimate this effect, and whether it has reduced. The empirical results suggest that the price of oil does significantly affect household consumption in Sweden. It is indicated that an increase in international oil prices is associated with a decrease in household consumption. Furthermore, there are indications that the effect of oil prices on consumption was higher before the mid-1990s than in succeeding periods.
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