EconPapers    
Economics at your fingertips  
 

Oil Shocks and External Balances

Lutz Kilian (), Alessandro Rebucci () and Nikola Spatafora ()

No 562, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: This paper studies the effects of demand and supply shocks in the global crude oil market on several measures of countries’ external balance, including the oil trade balance, the non-oil trade balance, the current account and changes in net foreign assets (NFA) during 1975– 2004. We explicitly take a multilateral and global perspective. In addition to the United States, the Euro area and Japan, we consider a number of regional aggregates including oil-exporting economies and middle-income oil-importing economies. Our first result is that the effect of oil shocks on the merchandise trade balance and the current account, which depending on the source of the shock can be large, depends critically on the response of the non-oil trade balance, and differs systematically between the United States and other oil importing countries. Second, using the Lane-Milesi-Ferretti NFA data set, we document the presence of large and systematic (if not always statistically significant) valuation effects in response to oil shocks, not only for the United States, but also for other oil-importing economies and for oil exporters. Our estimates suggest that increased international financial integration will tend to cushion the effect of oil shocks on NFA positions for major oil exporters and for the United States, but may amplify it for other oil importers.

Keywords: Oil prices; External Balances; Oil demand Shocks; Oil supply Shocks; International Financial Integration. (search for similar items in EconPapers)
JEL-codes: F32 F36 O16 O57 Q43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ene and nep-int
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://fordschool.umich.edu/rsie/workingpapers/Papers551-575/r562.pdf

Related works:
Journal Article: Oil shocks and external balances (2009) Downloads
Working Paper: Oil Shocks and External Balances (2007) Downloads
Working Paper: Oil Shocks and External Balances (2007) Downloads
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:mie:wpaper:562

Access Statistics for this paper

More papers in Working Papers from Research Seminar in International Economics, University of Michigan Contact information at EDIRC.
Bibliographic data for series maintained by FSPP Webmaster ().

 
Page updated 2019-08-16
Handle: RePEc:mie:wpaper:562