On the Oil Price-GDP Relationship

Akira Maeda

Japanese Economy, 2008, vol. 35, issue 1, 99-127

Abstract: This article analyzes the macroeconomic impact of high oil prices on various national economies. Using an analytical model, we show that oil price-real gross domestic product (GDP) elasticity can be estimated roughly from current oil prices, GDP, and oil imports and exports. In contrast to large-scale modeling, our approach is based on simple algebra and clear assumptions, and thus provides policymakers with a more transparent view of the vulnerability of economies to oil price increases, in terms of GDP; our model shows how this vulnerability declined sharply in the late 1980s and remained low through the 1990s, and how the euro-zone countries are becoming more vulnerable while Japan remains less so.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:mes:jpneco:v:35:y:2008:i:1:p:99-127

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DOI: 10.2753/JES1097-203X350104

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