News Shocks in Open Economies: Evidence from Giant Oil Discoveries
Rabah Arezki (),
Valerie Ramey () and
Liugang Sheng ()
No 20857, NBER Working Papers from National Bureau of Economic Research, Inc
This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output–the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time.
JEL-codes: E00 F32 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-ias, nep-mac and nep-opm
Note: EFG IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39) Track citations by RSS feed
Published as Rabah Arezki & Valerie Ramey & Liugang Sheng, 2015. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," IMF Working Papers, vol 15(209).
Published as Rabah Arezki & Valerie A. Ramey & Liugang Sheng, 2017. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 103-155.
Downloads: (external link)
Journal Article: News Shocks in Open Economies: Evidence from Giant Oil Discoveries (2017)
Working Paper: News Shocks in Open Economies; Evidence from Giant Oil Discoveries (2015)
Working Paper: News Shocks in Open Economies: Evidence from Giant Oil Discoveries (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:20857
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().