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On the mixed indirect effects of oil prices on international trade
Author(s) -
Akman Engin,
Bozkurt Ibrahim
Publication year - 2016
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/opec.12087
Subject(s) - variance decomposition of forecast errors , economics , china , granger causality , oil price , international economics , international trade , monetary economics , geography , econometrics , archaeology
This study concentrates on the indirect effects of oil prices on the international trade of oil‐exporting countries and their trade partners. We analysed the total imports of the leading oil‐exporting countries (Saudi Arabia, Nigeria, Venezuela, Kuwait, United Arab Emirates, Algeria and Mexico) and exports of the major trade partners exporting to them (China, United States, India, France, Korea, Germany and Japan). VAR models, Granger Causality Tests, Impulse Response Function and Variance Decomposition analysis are used as empirical methods. We find that oil price increases have a negative impact on the imports of oil‐exporting countries in general. However, effects on the exports of their trade partners are varied across the countries. Oil prices have positive indirect effects on the foreign trade of China, India and France while a negative effect is observed for Korea and the United States.