Are the responses of output and investment to oil price shocks asymmetric?: The case of an oil-importing small open economy

2020 ◽  
Author(s):  
Ozge Kandemir Kocaaslan
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Price Shocks

scholarly journals Globalization, Endogenous Oil Price Shocks and Chinese Economic Activity

2017 ◽  
Vol 22 (2) ◽  
pp. 39-64
Author(s):  
Gulzar Khan ◽  
Adiqa Kiani ◽  
Ather Maqsood Ahmed
Keyword(s):  
Open Economy ◽  
Aggregate Demand ◽  
Small Open Economy ◽  
Oil Prices ◽  
Chinese Economy ◽  
Oil Price ◽  
Economic Conditions ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Macroeconomic Activity

Using a structural vector autoregressive model, this study investigates the extent to which international oil price shocks have influenced the Chinese economy over the period 1991–2014. Given China’s intensified macroeconomic activity and its increasing demand for energy resources, we also examine the endogenous response of international oil prices to economic conditions in the country. To that end, we derive and empirically estimate a small open-economy New Keynesian model for China and the rest of the world. Our results show that the Chinese economy is relatively more sensitive to global economic conditions than to domestic policy actions. Global productivity shocks appear to be the most important variable causing Chinese macroeconomic activity through trade, where oil prices impact aggregate demand negatively.

scholarly journals DYNAMIC EFFECTS OF OIL PRICE SHOCKS AND THEIR IMPACT ON THE CURRENT ACCOUNT

2013 ◽  
Vol 18 (2) ◽  
pp. 316-337 ◽  
Author(s):  
Stefan F. Schubert
Keyword(s):  
Current Account ◽  
Open Economy ◽  
Small Open Economy ◽  
Oil Price ◽  
Dynamic Effects ◽  
Price Shocks ◽  
J Curve ◽  
Nonseparable Preferences ◽  
Imported Oil ◽  
The Current Account

We study the dynamic effects of an oil price shock on key economic variables and on the current account of a small open economy. We introduce time-nonseparable preferences into a standard model of a small open economy, where imported oil is used both as an intermediate input in production and as a consumption good. Using a plausible calibration of the model, we show that the changes in output and employment are quite small, and that the current account exhibits the J-curve property, both being in line with recent empirical evidence. After an oil price increase, employment falls and the current account first deteriorates. Over time, with gradually falling expenditures, the trade balance improves sufficiently to turn the current account into a surplus. The model thus provides a plausible explanation of recent empirical findings.

Monetary policy and the effect of the transfer of oil prices to inflation

2020 ◽  
pp. 41-50
Author(s):  
Ph. S. Kartaev ◽  
I. D. Medvedev
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Dynamic Models ◽  
Oil Prices ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Negative Effects ◽  
Price Shocks ◽  
Policy Regime ◽  
The Impact

The paper examines the impact of oil price shocks on inflation, as well as the impact of the choice of the monetary policy regime on the strength of this influence. We used dynamic models on panel data for the countries of the world for the period from 2000 to 2017. It is shown that mainly the impact of changes in oil prices on inflation is carried out through the channel of exchange rate. The paper demonstrates the influence of the transition to inflation targeting on the nature of the relationship between oil price shocks and inflation. This effect is asymmetrical: during periods of rising oil prices, inflation targeting reduces the effect of the transfer of oil prices, limiting negative effects of shock. During periods of decline in oil prices, this monetary policy regime, in contrast, contributes to a stronger transfer, helping to reduce inflation.

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