A crude shock: Explaining the short-run impact of the 2014–16 oil price decline across exporters

Francesco Grigoli (), Alexander Herman and Andrew Swiston

Energy Economics, 2019, vol. 78, issue C, 481-493

Abstract: The sharp, long-lasting decline in oil prices in 2014–16 tested the resilience of oil exporters. We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative effects. We find that pre-existing fundamentals account for about half of the cross-country variation in the impact of the shock. Oil exporters that weathered the shock better tended to have a stronger fiscal position, higher foreign currency liquidity buffers, a more diversified export base, a history of price stability, and a more flexible exchange rate regime. Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in fiscal revenue or economic activity.

Keywords: Event study; Fundamentals; Oil exporters; Oil price; Transmission of shocks (search for similar items in EconPapers)
JEL-codes: E32 E42 E60 F41 F43 Q43 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:78:y:2019:i:c:p:481-493

DOI: 10.1016/j.eneco.2018.11.025

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