Estimation of direct and indirect impact of oil price on growth

Abeysinghe, Tilak

doi:10.1016/s0165-1765(01)00476-1

Cited by 150 publications

(100 citation statements)

References 8 publications

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“…As in the case of output, the impact of oil price swings on inflation has, however, declined over the 23 Jimenez-Rodriguez and Sanchez (2005) derive these estimates from a variety of different methodologies. Their results are broadly in line with Abeysinghe (2001), Reifschneider, Tetlow and Williams (1999), and Mork (1994), Cashin, Mohaddes and Raissi (2014), and Peersman and Van Robays (2012). 24 See Tang, Wu, and Zhang (2010) and Allegret, Couharde and Guillaumin (2012).…”

Section: How Large Is the Pass-through Of Changes In Oil Prices To Insupporting

confidence: 66%

The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses

Baffes¹,

et al. 2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Following four years of relative stability at around $105 per barrel, oil prices have declined sharply since June 2014. This paper presents a comprehensive analysis of the sources of the recent decline in prices, and examines its macroeconomic, financial and policy implications. The recent drop in prices is a significant, but not an unprecedented event as it has some significant parallels with the price collapse in 1985-86. The recent decline has been driven by a number of factors: several years of upward surprises in the production of unconventional oil; weakening global demand; a significant shift in OPEC policy; unwinding of some geopolitical risks; and an appreciation of the U.S. dollar. Although the relative importance of each factor is difficult to pin down, OPEC's renouncement of price support and rapid expansion of oil supply from unconventional sources appear to have played a crucial role since mid-2014. The oil price drop will lead to substantial income shifts from oil exporters to oil importers resulting in a net positive effect for global activity over the medium term. Although several factors could counteract its impact on global growth and inflation, the drop in oil prices will pose significant challenges for monetary, fiscal, and structural policies. JEL Classification Numbers: Q40, Q41, Q43, F40, E32, E62. Terms of use: Documents in

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Section: How Large Is the Pass-through Of Changes In Oil Prices To Insupporting

confidence: 66%

The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses

Baffes¹,

et al. 2015

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“…In contrast, for net oil-exporter, open and developing economies, the impact of high oil prices depends on how they interact with the consumer and investor confidence. For example, the direct impact of high oil prices on both Indonesia and Malaysia is positive (this is similar to the findings of Saari et al [12]) and in the long run, they also lose out [1]. In contrast, many studies showed that an oil price shock, in the developing and developed economies, affects most the industrial sector [2,6,7].…”

Section: Literature Reviewsupporting

confidence: 81%

The Role of Government Climate Policy in an Oil Price Shock: A CGE Simulation Analysis

Solaymani¹,

Bt²,

Yusof³

et al. 2015

Proceedings of the 2015 International Conference on Modeling, Simulation and Applied Mathematics

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Abstract-Malaysia has made a pledge to reduce its 2005 GDP emission intensity levels by up to 40% by 2020 as its contribution to combat climate change. One of the proposed policies to achieve this goal is carbon taxation. We used a computable general equilibrium model to analyse the results of three scenarios -the impact of an oil price shock, the implementing of the climate policy on the Malaysian economy and the oil price rise when the Malaysian climate policy is implemented. We also attempt to assess how these scenarios contribute to the mitigation of rebound effect. The Malaysian climate policy implies a gain on the Malaysian economy of around 0.8% of GDP. The oil price shock in the presence of the Malaysian climate policy implied an additional gain on it of 0.2% of GDP (making a total gain of 1% of GDP), but this is equal to the 1% of GDP that Malaysia would lose from the oil price rise in the absence of the climate policy. This is implying that the climate policy is a potential economic protection for Malaysia. The climate policy and oil price shock would lead to mitigation of rebound effect in Malaysian economy.

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“…20 Our results are not substantially different from those obtained by Abeysinghe (2001) who estimated the total effects of a 50% oil price on GDP growth of 12 economies. The total impact of oil price was found to be much larger for the U.S. economy (-0.30% after 4 quarters) than for the rest of the OECD countries (-0.10%).…”

Section: The Direct and Indirect Effects Of 1990 Oil Price Shockcontrasting

confidence: 43%

Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries

Manera

Cologni

2005

SSRN Journal

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SummarySharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries. Moreover, the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries. While several authors have considered the direct channels of transmission of energy price increases, other authors have argued that the economic downturns arose from the monetary policy response to the inflation presumably caused by oil price increases. In this paper a structural cointegrated VAR model has been considered for the G-7 countries in order to study the direct effects of oil price shocks on output and prices and the reaction of monetary variables to external shocks. Empirical analysis shows that, for most of the countries considered, there seems to be an impact of unexpected oil price shocks on interest rates, suggesting a contractionary monetary policy response directed to fight inflation. In turn, increases in interest rates are transmitted to real economy by reducing output growth and the inflation rate.

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Estimation of direct and indirect impact of oil price on growth

Cited by 150 publications

References 8 publications

The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses

The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses

The Role of Government Climate Policy in an Oil Price Shock: A CGE Simulation Analysis

Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries

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