 Oil Shocks in a Global Perspective: Are they Really That Bad?Tobias Rasmussen and Agustin Roitman No 2011/194, IMF Working Papers from International Monetary Fund Abstract: Using a comprehensive global dataset, we outline stylized facts characterizing relationships between crude oil prices and macroeconomic developments across the world. Approaching the data from several angles, we find that the impact of higher oil prices on oil-importing economies is generally small: a 25 percent increase in oil prices typically causes GDP to fall by about half of one percent or less. While cross-country differences in impact are found to depend mainly on the relative size of oil imports, we also show that oil price shocks are not always costly for oil-importing countries: although higher oil prices increase the import bill, there are partly offsetting increases in external receipts. We provide a small open economy model illustrating the main transmission channels of oil shocks, and show how the recycling of petrodollars may mitigate the impact. Keywords: WP; oil price; exchange rate; Oil prices; Oil importing economies; Oil shock episodes; Emerging and developing countries; Recycling of petrodollars; oil-importing OECD; shock episode; oil exporter; oil import; world GDP volume; volume growth; oil importer; Oil; Inflation; Imports; Exports; Global (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2011/194 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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