WILL LOW CRUDE OIL PRICES CAUSE A GLOBAL RECESSION?

Mariana Papatulica

Impact of Socio-economic and Technological Transformations at National, European and International Level (ISETT), 2016, vol. 11

Abstract: Several economists are raising the question whether low crude oil prices are a †growth factor or a curse†for the world economy, and whether they could even cause a recession. Opinions about the effects of the sharp decline in world oil prices in the last 19 months are divided. While some say it is good for consumers, others say it is bad for the global economy. Low oil prices could create disadvantages by causing deflation. The risk is that deflationary expectations determine consumers to refrain from additional purchases in anticipation of even lower prices. This would lead to excess production capacity and ample inventories that will force down prices further. When buyers’ suspicions are confirmed, they delay further consumption in a vicious circle. Historically, plummeting crude oil prices have been perceived as a growth factor, especially in net importing countries. But this has not yet been translated into tangible positive economic effects worldwide.

Keywords: crude oil price; crude oil supply; fundamental factors; macroeconomic effects; deflation (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.iem.ro/rem/index.php/itset/article/view/258/327 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iem:imptrs:v:11:y:2016:id:2822000009590091

Access Statistics for this article

Impact of Socio-economic and Technological Transformations at National, European and International Level (ISETT) is currently edited by Simona Moagar Poladian, PhD

More articles in Impact of Socio-economic and Technological Transformations at National, European and International Level (ISETT) from Institute for World Economy, Romanian Academy Contact information at EDIRC.
Bibliographic data for series maintained by Ionela Baltatescu ( this e-mail address is bad, please contact ).