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External Capital Structures and Oil Price Volatility

John Burger, Alessandro Rebucci (), Francis Warnock and Veronica Warnock

No 4667, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.

Keywords: Hedging; Oil; Foreign assets and liabilities; International portfolios (search for similar items in EconPapers)
JEL-codes: F3 G1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene
Date: 2010-05
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Working Paper: External Capital Structures and Oil Price Volatility (2010) Downloads
Working Paper: External Capital Structures and Oil Price Volatility (2010) Downloads
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