How Do Structural Oil Price Shocks Affect China's Investor Sentiment? The Critical Role of OPEC Oil Supply Shocks*

Using time-varying BVARs, we find a substantial decline in the short-run price elasticity of oil demand since the mid-1980s. This finding helps explain why an oil production shortfall of the same magnitude is associated with a stronger response of oil prices and more severe macroeconomic consequences over time, while a similar oil price increase is associated with smaller output effects. Oil supply shocks also account for a smaller fraction of real oil price variability in more recent periods, in contrast to oil demand shocks. The overall effects of oil supply disruptions on the US economy have, however, been modest. (JEL E31, E32, Q41, Q43)

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Role of oil price shocks on macroeconomic activities: An SVAR approach to the Malaysian economy and monetary responses

Energy Policy ◽

10.1016/j.enpol.2011.09.067 ◽

2011 ◽

Vol 39 (12) ◽

pp. 8062-8069 ◽

Cited By ~ 32

Author(s):

Huson Joher Ali Ahmed ◽

I.K.M. Mokhtarul Wadud

Keyword(s):

Oil Price ◽

Oil Price Shocks ◽

Price Shocks

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The Dynamic Effects of Oil Price Shocks on the Economies of the Twelve Major Oil Exporting Countries from 1970-2013: The Role of Political Economy Factors

International Journal of Business and Economic Sciences Applied Research ◽

10.25103/ijbesar.131.04 ◽

2020 ◽

Vol 13 (1) ◽

pp. 29-51

Author(s):

Sinem Sonmez

Keyword(s):

Political Economy ◽

Oil Price ◽

Oil Price Shocks ◽

Dynamic Effects ◽

Price Shocks

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On Oil Price Shocks: The Role of Storage

IMF Economic Review ◽

10.1057/imfer.2012.18 ◽

2012 ◽

Vol 60 (4) ◽

pp. 505-532 ◽

Cited By ~ 14

Author(s):

Deren Unalmis ◽

Ibrahim Unalmis ◽

Derya Filiz Unsal

Keyword(s):

Oil Price ◽

Oil Price Shocks ◽

Price Shocks

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Global Commodity and Oil Price Movements, Macroeconomic Performance and Challenges for an Emerging Economy: The Indian Experience

Global Business Review ◽

10.1177/0972150917713885 ◽

2018 ◽

Vol 19 (3) ◽

pp. 650-674 ◽

Cited By ~ 3

Author(s):

D. Tripati Rao ◽

Saurabh Goyal

Keyword(s):

Emerging Economy ◽

Oil Price ◽

Impulse Response Functions ◽

Oil Price Shocks ◽

Macroeconomic Performance ◽

Price Shocks ◽

Price Fluctuations ◽

Private Credit ◽

The Impact

Commodity and oil price fluctuations have significant bearing on domestic macroeconomic performance and macroeconomic policymaking of an emerging economy. The article explores the impact of non-energy commodity and oil price fluctuations on output, inflation and real exchange rate (RER) in India; and commodity and oil constituting sizeable imports. The empirical analysis carried out through vector error correction model (VECM) for the post-liberalization period 1991–2014 clearly points out that commodity and oil price shocks have a significant impact on the variation in output and prices accounting for RER adjustment and the role of a developed financial market (private credit). The RER adjusts to commodity and oil price shocks, accounting for foreign exchange reserves and financial markets (private credit). The impulse response functions indicate that one standard deviation shock in commodity and oil price persists for three to eight quarters over domestic prices and output. While these results point to lessening of commodity and oil imports through a series of medium and long-term structural-cum-policy reform measures, in the immediate, they also lend a role of intervention by monetary authority (central bank) in pursuit of inflation targeting. Conjointly, pursuance of countercyclical fiscal policy to stabilize domestic output and prices in short run are called for.

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