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Asymmetric impacts of oil prices on major oil exporting and importing countries

Rafiq, Shuddhasattwa and Sgro, Pasquale 2016, Asymmetric impacts of oil prices on major oil exporting and importing countries, in IAEE 2016 : Meeting Asia's energy challenges : Proceedings of the 5th IAEE Asian Conference, International Association for Energy Economics, [Perth, W.A.], pp. 1-33.

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Title Asymmetric impacts of oil prices on major oil exporting and importing countries
Author(s) Rafiq, ShuddhasattwaORCID iD for Rafiq, Shuddhasattwa orcid.org/0000-0002-2109-7441
Sgro, PasqualeORCID iD for Sgro, Pasquale orcid.org/0000-0002-1450-730X
Conference name IAEE Asian. Conference (5th : 2016 : Perth, Western Australia)
Conference location Perth, Western Australia
Conference dates 14-17 Feb. 2016
Title of proceedings IAEE 2016 : Meeting Asia's energy challenges : Proceedings of the 5th IAEE Asian Conference
Publication date 2016
Start page 1
End page 33
Total pages 33
Publisher International Association for Energy Economics
Place of publication [Perth, W.A.]
Keyword(s) oil shocks
price asymmetry
oil exporters
oil importers
non-linearity
Summary This study investigates the effects oil price shocks on three measures of oil exporters’ and oil importers’ external balances: total trade balance, oil trade balance and non-oil trade balance. We employ three second generation heterogeneous linear panel models as well as one recently developed non-linear panel estimation technique which allows for cross sectional dependence. With respect to 28 major oil exporting countries, while an increase in oil prices leads to an improved real oil trade balance, it is detrimental to the non-oil and total trade balance situations. This finding might be due to the expenditure effect arising from increases in proceeds from oil exports. A decrease in oil prices is found to be beneficial for both total and oil balances in these oil exporting countries. For 40 major oil importers, they seem to be increasingly shielded from positive oil shocks over the 1970s and 1980s; however, it is oil price declines that they need to worry about. A decline in oil prices have a negative impact on both total and real oil trade balances, resulting from increased oil imports in emerging economies. Hence, a decline in oil prices is beneficial to oil exporters due to the quantity effect outweighing the price effect, while for oil importers a stable oil price is more desirable than a price decline. These results are important to note if we are to get a good grasp on the magnitude of the trade and macroeconomic effect of oil price changes and what the policy responses should be.
Language eng
Field of Research 091402 Geomechanics and Resources Geotechnical Engineering
Socio Economic Objective 0 Not Applicable
HERDC Research category EN.1 Other conference paper
Persistent URL http://hdl.handle.net/10536/DRO/DU:30093958

Document type: Conference Paper
Collection: Department of Economics
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