An Estimation of the Impact of Oil Shocks on Crude Oil Exporting Economies and Their Trade Partners

Farhad Taghizadeh-Hesary (), Naoyuki Yoshino (), Ghahraman Abdoli and Asadollah Farzinvash
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Asadollah Farzinvash: Faculty of Economics, University of Tehran, Tehran 141556445, Iran

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2013, vol. 8, issue 4, 571-591

Abstract: This research evaluates the impact of oil price shocks on oil producing and consuming economies; we used a simultaneous equation framework for different countries with business relations. As expected, we found that oil-producers (here, Iran and Russia) benefit from oil price shocks. However contrary to previous findings, they also benefit from the indirect effect through their trade partners. For oil-consuming economies, the effects are more diverse. In some countries, output falls in response to an oil price shock, while some others seem to be relatively immune. Generally, those countries which trade more with oil producers gain indirect benefits via higher demand from oil-producers. For instance, the Netherlands, Germany, France, Italy, the US, the UK, and China get a negative direct effect and positive indirect effect from oil producing countries. This is exactly the result that we anticipated. India has both negative effects directly and indirectly and seems to suffer more in a positive oil price shock. For Japan, Spain, Switzerland and Turkey the results are reversed. They benefit from an oil shock directly and indirectly.

Keywords: oil; macroeconomic; trade linked case; Iran; Russia (search for similar items in EconPapers)
JEL-codes: C30 E32 F43 Q43 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:8:y:2013:i:4:p:571-591

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