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Responses of Economic Activity to Global Oil Market Shocks: A Comparative Analysis of Major Net Oil‐Producing and ‐Consuming Countries
Author(s) -
Sotoudeh MAli,
Worthington Andrew C.
Publication year - 2017
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12342
Subject(s) - economics , oil price , oil supply , aggregate demand , supply and demand , demand shock , oil production , oil storage trade , crude oil , crack spread , production (economics) , monetary economics , agricultural economics , macroeconomics , petroleum engineering , monetary policy , engineering
We argue that four channels drive oil price shocks during 1986M5–2013M1, namely the oil supply, aggregate demand, oil‐specific demand and real exchange rates. Our findings are that oil price shocks driven by oil supply positively affect net oil‐consumer countries faster than net oil‐producer countries. Oil price shocks driven by aggregate demand are largely country‐specific. Oil shocks driven by other demands influence net oil‐producers faster than net oil‐consumers negatively, and persistently mostly among net oil‐producers. Other shocks have large negative effects on the industrial production of all countries, with responses appearing very quickly and persisting for at least a year.