Gas Prices: A Trigger for Great Recession Part II

by Steven Hansen

This past week, one political candidate opined:

We went into a recession in 2008 because of gasoline prices.  The bubble burst in housing because people couldn’t pay their mortgages because they were looking at $4 a gallon gasoline.

Readers will note that I rarely take absolute positions on a subject – not only is the supporting evidence seldom clear or straight forward, but also the exact historical dynamic mix is unlikely to duplicate again in the future (making use of historical data to prove a point problematic).  A recession caused by higher energy prices is one such subject – it is difficult to prove energy’s exact relationship to the economy.

Read more: http://econintersect.com/wordpress/?p=19374