An estimation of the impact of oil shocks on crude oil exporting economies and their trade partners

Farhad Taghi Zadeh Hesary, Naoyuki Yoshino, Ghahraman Abdoli, Asadollah Farzinvash

Research output: Contribution to journalArticle

23 Citations (Scopus)

Abstract

This research evaluates the impact of oil price shocks on oil producing and consuming economies; we used a simultaneous equation framework for different countries with business relations. As expected, we found that oil-producers (here, Iran and Russia) benefit from oil price shocks. However contrary to previous findings, they also benefit from the indirect effect through their trade partners. For oil-consuming economies, the effects are more diverse. In some countries, output falls in response to an oil price shock, while some others seem to be relatively immune. Generally, those countries which trade more with oil producers gain indirect benefits via higher demand from oil-producers. For instance, the Netherlands, Germany, France, Italy, the US, the UK, and China get a negative direct effect and positive indirect effect from oil producing countries. This is exactly the result that we anticipated. India has both negative effects directly and indirectly and seems to suffer more in a positive oil price shock. For Japan, Spain, Switzerland and Turkey the results are reversed. They benefit from an oil shock directly and indirectly.

Original languageEnglish
Pages (from-to)571-591
Number of pages21
JournalFrontiers of Economics in China
Volume8
Issue number4
DOIs
Publication statusPublished - 2013 Jan 1
Externally publishedYes

Fingerprint

Oil shocks
Exporting
Crude oil
Oil
Oil price shocks
Indirect effects
China
Italy
Turkey
Simultaneous equations
Germany
Direct effect
India
Iran
Russia
France
Switzerland
Japan
Spain
The Netherlands

Keywords

  • Iran
  • macroeconomic
  • oil
  • Russia
  • trade linked case

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

An estimation of the impact of oil shocks on crude oil exporting economies and their trade partners. / Taghi Zadeh Hesary, Farhad; Yoshino, Naoyuki; Abdoli, Ghahraman; Farzinvash, Asadollah.

In: Frontiers of Economics in China, Vol. 8, No. 4, 01.01.2013, p. 571-591.

Research output: Contribution to journalArticle

Taghi Zadeh Hesary, Farhad ; Yoshino, Naoyuki ; Abdoli, Ghahraman ; Farzinvash, Asadollah. / An estimation of the impact of oil shocks on crude oil exporting economies and their trade partners. In: Frontiers of Economics in China. 2013 ; Vol. 8, No. 4. pp. 571-591.
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