 The macroeconomic effects of oil price fluctuations on a small open oil-producing country: The case of Trinidad and TobagoTroy Lorde, Mahalia Jackman and Chrystol Thomas Energy Policy, 2009, vol. 37, issue 7, 2708-2716 Abstract: Using vector autoregressive (VAR) methodology, this paper empirically investigates the macroeconomic effects of oil price fluctuations on Trinidad and Tobago. Overall, we find that the price of oil is a major determinant of economic activity of the country. Our impulse response functions suggest that following a positive oil price shock, output falls within the first two years followed by positive and growing response. We also investigate the macroeconomic impact of oil price volatility. Results suggest that an unanticipated shock to oil price volatility brings about random swings in the macroeconomy; however, only government revenue and the price level exhibit significant responses. With regard to the magnitude of the responses, shocks to oil price volatility tend to yield smaller macroeconomic impacts in comparison to shocks to oil prices. Variance decompositions suggest that the price of oil is a major component of forecast variation for most macroeconomic variables. Finally, Granger-causality tests indicate causality from oil prices to output and oil prices to government revenue. Keywords: Oil; price; fluctuations; Innovation; accounting; Trinidad; and; Tobago (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:eee:enepol:v:37:y:2009:i:7:p:2708-2716 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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