Earnings Performance of Companies Using Debt Financing

Research Proposal

Impact of Oil Price Fluctuation on the Macro Economy Von Lamey

Eastern New Mexico University

December 3, 2013

Table of Contents

Introduction……………………………………………………………………3

Review of Literature…………………………………………………………..5

Theory…………………………………………………………………………15

Application…………………………………………………………………….18

Summary & Conclusion……………………………………………………….20

Tables…………………………………………………………………………..22

Bibliography……………………………………………………………………24

1. Introduction Oil price fluctuations have affected the people and economies of the U.S. for most of the twentieth century. The commodity has seen minor changes and major fluctuations during this period. Major price changes within a short timeframe are called shocks. The research I propose will attempt to answer the question: What is the impact of changing oil prices on the macro economy of a country? Research has demonstrated oil price fluctuations do impact economies as well as supply of and demand for the commodity. This influence on macroeconomic activity generated symmetric movement between price and many macroeconomic indices in the 1970 's. However, after 1982, macroeconomic indices did not demonstrate the same proclivity to react to oil price movement. Information spreads almost instantly with the emergence of the internet1. This expedient movement of news has led to an evolving trend of speculation which may or may not be beneficial to commodity pricing. One may infer that the recent prevalence of mass media leads to rapid movement back and forth of oil prices. I insert this topic at this point to bring to the surface that mass media was in early development during the proposed study periods.
The research on oil price fluctuation has produced varying reactions among academia and policy makers. Impressions about the impact of oil price

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