The Impact Of Oil Price Shocks On The Macroeconomic Variables Of Major Oil Exporting Countries
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| Author | : Elnaz Hajebi |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2022 |
| Genre | : |
| ISBN | : |
In a world scale economy considering interlinkage and interactions between countries, economic shocks will affect various economies through channels. Meantime, the oil price is one of the most important channels. New studies show that the connection between the oil price and the world economy has numerous complications which could not be incorporated in traditional frames with only taking into consideration separated and identified oil supply and demand shocks without considering synchronicity and the source of the main shocks. Therefore it is essential to model a multi-dimensional system. The purpose of this study is to investigate the impact of oil price shocks on the major macroeconomic variables of oil-exporting countries from 1974Q1 to 2019Q4 using the global vector autoregressive (GVAR) approach. The macroeconomic variables include four domestic variables, three foreign variables and one global variable. In particular, it provides a theoretical framework for the global oil market to illustrate how multi-country approach to modeling oil markets can be used to identify country-specific oil price shocks. On the empirical side, it shows the global economic implications of oil price shocks vary considerably depending on which country is subject to the shock. The results of this study indicate that the economic consequences of a positive oil price shock are different on macroeconomic variables in oil-exporting countries in short-run and long-run. However, in response to a positive oil price shock, most of OPEC countries experience long-run inflationary pressures.
| Author | : Mr.Heiko Hesse |
| Publisher | : International Monetary Fund |
| Total Pages | : 24 |
| Release | : 2009-10-01 |
| Genre | : Business & Economics |
| ISBN | : 1451873670 |
This paper analyzes the relationship between oil price shocks and bank profitability. Using data on 145 banks in 11 oil-exporting MENA countries for 1994-2008, we test hypotheses of direct and indirect effects of oil price shocks on bank profitability. Our results indicate that oil price shocks have indirect effect on bank profitability, channeled through country-specific macroeconomic and institutional variables, while the direct effect is insignificant. Investment banks appear to be the most affected ones compared to Islamic and commercial banks. Our findings highlight systemic implications of oil price shocks on bank performance and underscore their importance for macroprudential regulation purposes in MENA countries.
| Author | : Jordi Galí |
| Publisher | : University of Chicago Press |
| Total Pages | : 663 |
| Release | : 2010-03-15 |
| Genre | : Business & Economics |
| ISBN | : 0226278875 |
United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.
| Author | : Mr.Paul Cashin |
| Publisher | : International Monetary Fund |
| Total Pages | : 41 |
| Release | : 2012-10-23 |
| Genre | : Business & Economics |
| ISBN | : 1475596073 |
We employ a set of sign restrictions on the generalized impulse responses of a Global VAR model, estimated for 38 countries/regions over the period 1979Q2–2011Q2, to discriminate between supply-driven and demand-driven oil-price shocks and to study the time profile of their macroeconomic effects for different countries. The results indicate that the economic consequences of a supply-driven oil-price shock are very different from those of an oil-demand shock driven by global economic activity, and vary for oil-importing countries compared to energy exporters. While oil importers typically face a long-lived fall in economic activity in response to a supply-driven surge in oil prices, the impact is positive for energy-exporting countries that possess large proven oil/gas reserves. However, in response to an oil-demand disturbance, almost all countries in our sample experience long-run inflationary pressures and a short-run increase in real output.
| Author | : Amir Sadeghi |
| Publisher | : International Monetary Fund |
| Total Pages | : 27 |
| Release | : 2017-12-22 |
| Genre | : Business & Economics |
| ISBN | : 1484336275 |
This paper examines the impact of government size on how output and government expenditure respond to oil price shocks in 28 oil-exporting countries between 1990 and 2016. Results suggest that if the size of government (measured by government expenditure-to-(non-oil) GDP ratio) is larger, non-oil output growth, in response to a positive oil price shock, tends to be greater and output volatility higher. Furthermore, I find that an unexpected increase in oil price leads to expansion in government expenditure and the expansion is larger, the larger is the government. This paper provides empirical evidence for direct correlation between government size and macroecnomic stability in oil-exporting countries. The findings imply that fiscal consolidation and economic diversification help to narrow down economic exposure to exogenous oil price shocks and reduce volatility in non-oil output.
| Author | : Nikola Spatafora |
| Publisher | : World Bank Publications |
| Total Pages | : 42 |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
January 1995 The authors investigate the impact on economic growth and development of long-run movements in the external terms of trade, with special reference to the experience of 18 oil-exporting countries between 1973 and 1989. They argue that this sample approximates a controlled experiment for examining the impact of unanticipated -- but permanent -- shocks to the terms of trade. They analyze the sample econometrically using panel data techniques. They find that permanent terms-of-trade shocks have a strongly significant positive effect on investment, which they justify theoretically on the grounds that countries in the sample import much of their capital equipment. The shocks also have a significant positive effect on consumption. Government consumption responds almost twice as strongly as private consumption. The shocks have no effect on savings and adversely affect the trade and current account balances. There is a significant positive effect on the output of all main categories of nontradables. But Dutch disease effects are strikingly absent. Agriculture and manufacturing do not contract in reaction to an oil price increase. Dutch disease effects may be absent in part because of policy-induced output restraints in the oil sector, or because of the enclave nature of the oil sector, which does not participate in domestic factor markets.
| Author | : Mr.Aasim M. Husain |
| Publisher | : International Monetary Fund |
| Total Pages | : 41 |
| Release | : 2015-07-14 |
| Genre | : Business & Economics |
| ISBN | : 151357227X |
The sharp drop in oil prices is one of the most important global economic developments over the past year. The SDN finds that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.
| Author | : Vivian Randhawa |
| Publisher | : GRIN Verlag |
| Total Pages | : 30 |
| Release | : 2018-05-14 |
| Genre | : Business & Economics |
| ISBN | : 3668702942 |
Seminar paper from the year 2014 in the subject Business economics - Trade and Distribution, grade: 1,7, Hamburg University of Applied Sciences, language: English, abstract: After oil was discovered in the late 19th century, oil prices were primarily determined first by the major petroleum companies and then by the oil-exporting nations, who joined forces in the Organization of Petroleum Exporting Countries (OPEC). In the 1960s, the market-oriented pricing system was adopted and since then oil prices are primarily formed by supply and demand. Oil prices are characterized by permanent price fluctuations. Especially rapid price rises and longer-term fluctuations are at the focus of many scientific work. Because oil is an indispensable resource for the global economy, the question arises after the economic impacts of such price developments. While oil- exporting countries benefit from strong price rises, oil- importing countries, with emerging countries leading the way, are negatively affected. The interplay of these opposite effects and the global economic situation are crucial for the net effect on global economy.
| Author | : Mr.Kamiar Mohaddes |
| Publisher | : International Monetary Fund |
| Total Pages | : 34 |
| Release | : 2011-12-01 |
| Genre | : Business & Economics |
| ISBN | : 1463927258 |
This paper extends the long-run growth model of Esfahani et al. (2009) to a labor exporting country that receives large inflows of external income?the sum of remittances, FDI and general government transfers?from major oil-exporting economies. The theoretical model predicts real oil prices to be one of the main long-run drivers of real output. Using quarterly data between 1979 and 2009 on core macroeconomic variables for Jordan and a number of key foreign variables, we identify two long-run relationships: an output equation as predicted by theory and an equation linking foreign and domestic inflation rates. It is shown that real output in the long run is shaped by: (i) oil prices through their impact on external income and in turn on capital accumulation, and (ii) technological transfers through foreign output. The empirical analysis of the paper confirms the hypothesis that a large share of Jordan's output volatility can be associated with fluctuations in net income received from abroad. External factors, however, cannot be relied upon to provide similar growth stimuli in the future, and therefore it will be important to diversify the sources of growth in order to achieve a high and sustained level of income.
| Author | : Francesco Grigoli |
| Publisher | : International Monetary Fund |
| Total Pages | : 26 |
| Release | : 2017-07-18 |
| Genre | : Business & Economics |
| ISBN | : 1484311620 |
The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative effects. We find that pre-existing fundamentals account for about half of the cross-country variation in the impact of the shock. Oil exporters that weathered the shock better tended to have a stronger fiscal position, higher foreign currency liquidity buffers, a more diversified export base, a history of price stability, and a more flexible exchange rate regime. Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in fiscal revenue or economic activity.
