Implications of Cheap Oil for Emerging Markets

Alain Kabundi () and Franziska Ohnsorge

No 9403, Policy Research Working Paper Series from The World Bank

Abstract: The COVID-19-triggered collapse in oil prices in March and April 2020 was the seventh, and byfar the most severe, in a series of such collapses since 1970. This paper, first, compares this most recent collapseand its drivers with previous ones in an event study. It finds that it was associated with an exceptionally severeplunge in oil demand. Second, in a local projections model, this paper estimates the implications of demand- andsupply-driven oil price collapses for growth in emerging markets and developing economies (EMDEs). The paper findsthat steep oil price collapses were associated with significant and lasting output losses in energy-exportingEMDEs but no meaningful output gains in energy-importing EMDEs. These results are robust to multiple robustness checks.

Keywords: Energy Demand; Energy and Mining; Energy and Environment; Armed Conflict; Oil Refining & Gas Industry; Macroeconomic Management (search for similar items in EconPapers)
Date: 2020-09-21
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Implications of Cheap Oil for Emerging Markets (2020)
Working Paper: Implications of cheap oil for emerging markets (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9403

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