The Impact of Changing Energy Prices on the Texas Economy

Energy is fundamental to the Texas economy, although its importance has changed over time. This study examines the relationship between energy prices and the Texas economy. We model the relationship between energy prices and Texas state-level employment, local employment and output across time periods. We find that energy price shocks have varying impacts on employment and output in different periods. The effects of energy price shocks, which had declined since the first oil boom of the 1970s and early 1980s, have become greater in recent years as a result of the shale revolution.