Video: Economist Christiane Baumeister on energy demand fluctuations and macroeconomics

Author: Todd Boruff

 

“In the past, usually, oil price increases were followed by recessions, and then once we entered the 2000s that no longer seemed to be the case, so that told us that probably different forces are at work right now that determine oil prices that don’t have such severe economic consequences as a recession.” 

— Christiane Baumeister

Christiane Baumeister is Robert and Irene Bozzone Associate Professor of Economics at the University of Notre Dame. Her research interests include empirical macroeconomics, energy economics, applied time series econometrics, and monetary economics. More information can be found at her faculty page.


Video Transcript

I’m an empirical macroeconomist and in my work I’m trying to understand what the fundamental economic forces are that cause fluctuations in the data that we observe.

Identification of causal effects is pretty difficult in macroeconomics because, at the aggregate level, everything interacts with everything. So for example, when the Federal Reserve sets monetary policy and decides about the interest rate, they’re reacting to developments in the economy, but at the same time they are influencing the future course of the economy, and so in my research I develop empirical methods that help us disentangle cause and effect.

I’m currently working on developing an energy demand indicator for the U.S. Energy Information Administration. We have a pretty good understanding of the future course of oil prices — also given some of my recent work that developed models for forecasting oil prices — but we don’t really have a very good understanding of where demand is headed over the near future. Oil is a very important factor on which the economy is thriving because it’s an input into a number of industries, but it also plays a big role in the transportation sector and hence it affects both households and firms. So when the price of oil moves then that affects the entire economy.

Now especially post financial crisis, the economy operates in a very different way compared to before and so we need to rethink and restudy a lot of the aspects of the economy that we took for granted. In the past usually oil price increases were followed by recessions and then once we entered the 2000s that no longer seemed to be the case, so that told us that probably different forces are at work right now that determine oil prices that don’t have such severe economic consequences as a recession.

Notre Dame is a really great place to be at for my research because there are a lot of colleagues who are interested in similar questions that I’m interested in and whom I can talk to, but I also like the place a lot because of the students. They’re really great to work with. I have a number of students working as research assistants for me, and they get really excited about the work that I’m doing which then excites me as well, both working with them and to share in my experience with them.

Originally published by Todd Boruff at al.nd.edu on September 14, 2018.