Oil Shock Impacts on the Borderplex Regional Economy


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Authors

  • Thomas M. Fullerton Department of Economics & Finance University of Texas at El Paso El Paso, TX 79968-0543 USA
  • Teodulo Soto El Paso Electric Company

Abstract

This study analyzes the effect of oil price shocks on the economies of El Paso, Texas and Ciudad Juarez, Chihuahua, jointly referred to as the “Borderplex.”  It employs a measure of the net oil price increase developed by Hamilton (1996) in a manner similar to that applied by Sill (2007) to the United States national economy.  Impulse response functions are calculated to determine the impact of 10-percent oil price shocks on the Borderplex regional economy.  The asymmetrical relationship between oil prices and economic performance is also examined using a net oil price decrease variable.  Results found in this study are inconclusive.  Negative and statistically significant relationships for the net oil price increase are obtained in the El Paso real personal income, El Paso non-agricultural employment, Ciudad Juarez retail sales, and Ciudad Juarez formal sector employment equations.  Inconsistent results are reported for the El Paso retail sales equation, while there appears to be no relationship between net oil price increases and El Paso gross metropolitan product or between net oil price increases and El Paso median existing single family house prices. The results presented in this study do not find definitive evidence in support of an asymmetrical relationship between oil prices and metropolitan economic performance. Keywords: Oil Price Shocks; Borderplex Regional Economy; Econometrics JEL Classifications: Q43; M21; R15 

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Author Biographies

Thomas M. Fullerton, Department of Economics & Finance University of Texas at El Paso El Paso, TX 79968-0543 USA

Tom Fullerton is a Professor of Economics in the College of Business Administration at the University of Texas at El Paso where he also holds the Chair for the Study of Trade in the Americas.  Dr. Fullerton teaches graduate courses in econometrics, managerial economics, urban economics, and border economics.  Fullerton holds degrees from UTEP, Iowa State University, University of Pennsylvania, and University of Florida.

Teodulo Soto, El Paso Electric Company

Teodulo Soto is an Energy Economist with the Corporate Planning Department at El Paso Electric Company.  Mr. Soto holds an MS in Economics from the University of Texas at El Paso where he studied as a James Foundation Scholar.  Prior to joining El Paso Electric, Mr. Soto worked as an Associate Economist with Border Region Modleing Project at the University of Texas at El Paso.

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Published

2014-10-29

How to Cite

Fullerton, T. M., & Soto, T. (2014). Oil Shock Impacts on the Borderplex Regional Economy. International Journal of Energy Economics and Policy, 5(1), 14–26. Retrieved from https://www.econjournals.com/index.php/ijeep/article/view/949

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