Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We propose a refinement of the imprecise approximation of the oil consumption growth rate used by Baumeister and Hamilton (2019) in their model of the global oil market. Our modification involves replacing the first difference of global oil inventories by the second difference, which denotes changes in the addition to inventory stock. Accounting for our approximation and updating the sample reduces the short-run price elasticity of oil supply and the contribution of oil supply shocks to oil price fluctuations, aligning the conclusions from the Baumeister and Hamilton’s (2019) model with the consensus in the literature that the supply elasticity is close to zero and that oil demand shocks are the most important driver of oil price fluctuations.