Rising oil production is likely to lead to faster global growth. Falling oil production is likely to lead to slower global growth. That’s because oil is an important input into the production process.

However falling oil prices have no implications for global growth—it merely redistributes global wealth.

That’s why estimates of US RGDP growth next year at $66/barrel are not much different from what people were estimating at $100/barrel. Global oil output hasn’t changed very much.

Might falling oil prices affect AD? Not with monetary offset–the Fed will simply adjust the date at which they start raising rates.

Focus on Q, not P. Oil output helps explain why the world economy slowed in 1974, but boomed in 2007, despite rising oil prices in both years.