Empirical Economics

, Volume 40, Issue 3, pp 645–655

Oil and the macroeconomy: using wavelets to analyze old issues

Original Paper

DOI: 10.1007/s00181-010-0371-x

Cite this article as:
Aguiar-Conraria, L. & Soares, M.J. Empir Econ (2011) 40: 645. doi:10.1007/s00181-010-0371-x


We use (cross) wavelet analysis to decompose the time–frequency effects of oil price changes on the macroeconomy. We argue that the relation between oil prices and industrial production is not clear-cut. There are periods and frequencies where the causality runs from one variable to the other and vice-versa, justifying some instability in the empirical evidence about the macroeconomic effects of oil price shocks. We also show that the volatility of both the inflation rate and the industrial output growth rate started to decrease in the decades of 1950 and 1960.


Business cyclesOil shocksWaveletsCross waveletsWavelet coherency

JEL Classification


Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.NIPE, Departamento de EconomiaUniversidade do MinhoBragaPortugal
  2. 2.Departamento de MatemáticaUniversidade de MinhoBragaPortugal