Trade linkages and transmission of oil price fluctuations

Farhad Taghi Zadeh Hesary, Naoyuki Yoshino, E. Rasoulinezhad, Youngho Chang

Research output: Contribution to journalArticle

Abstract

This study is an attempt to ascertain how oil price shock can affect a trade-linked system via monetary variables. To this end, a simultaneous equation model (SEM) was applied through a Weighted Two Stage Least Squares (W2SLS) estimation method to different countries (21 cases) with business relations over the period from Q1 2000 to Q4 2015. In the case of oil-exporting countries—consisting of Iran, Russian Federation, UAE, Indonesia, and Kazakhstan—the findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian nations (Japan; People's Republic of China; Republic of Korea; Viet Nam; Taipei China; Singapore; and Hong Kong, China); Commonwealth of Independent States (CIS) (Ukraine and Belarus) and others (the United States, India, and Turkey). The results showed that all these countries importing oil face a negative supply shock, except Turkey which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.

Original languageEnglish
Article number110872
JournalEnergy Policy
DOIs
Publication statusPublished - 2019 Oct 1

Fingerprint

oil
Commonwealth of Nations
estimation method
price
Oils
European Union
Industry
effect

Keywords

  • Crude oil price
  • Direct and indirect effect of oil shocks
  • Trade linkage

ASJC Scopus subject areas

  • Energy(all)
  • Management, Monitoring, Policy and Law

Cite this

Trade linkages and transmission of oil price fluctuations. / Taghi Zadeh Hesary, Farhad; Yoshino, Naoyuki; Rasoulinezhad, E.; Chang, Youngho.

In: Energy Policy, 01.10.2019.

Research output: Contribution to journalArticle

Taghi Zadeh Hesary, Farhad ; Yoshino, Naoyuki ; Rasoulinezhad, E. ; Chang, Youngho. / Trade linkages and transmission of oil price fluctuations. In: Energy Policy. 2019.
@article{3fdd11cf20d147d69d43eea9eea5d230,
title = "Trade linkages and transmission of oil price fluctuations",
abstract = "This study is an attempt to ascertain how oil price shock can affect a trade-linked system via monetary variables. To this end, a simultaneous equation model (SEM) was applied through a Weighted Two Stage Least Squares (W2SLS) estimation method to different countries (21 cases) with business relations over the period from Q1 2000 to Q4 2015. In the case of oil-exporting countries—consisting of Iran, Russian Federation, UAE, Indonesia, and Kazakhstan—the findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian nations (Japan; People's Republic of China; Republic of Korea; Viet Nam; Taipei China; Singapore; and Hong Kong, China); Commonwealth of Independent States (CIS) (Ukraine and Belarus) and others (the United States, India, and Turkey). The results showed that all these countries importing oil face a negative supply shock, except Turkey which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.",
keywords = "Crude oil price, Direct and indirect effect of oil shocks, Trade linkage",
author = "{Taghi Zadeh Hesary}, Farhad and Naoyuki Yoshino and E. Rasoulinezhad and Youngho Chang",
year = "2019",
month = "10",
day = "1",
doi = "10.1016/j.enpol.2019.07.008",
language = "English",
journal = "Energy Policy",
issn = "0301-4215",
publisher = "Elsevier BV",

}

TY - JOUR

T1 - Trade linkages and transmission of oil price fluctuations

AU - Taghi Zadeh Hesary, Farhad

AU - Yoshino, Naoyuki

AU - Rasoulinezhad, E.

AU - Chang, Youngho

PY - 2019/10/1

Y1 - 2019/10/1

N2 - This study is an attempt to ascertain how oil price shock can affect a trade-linked system via monetary variables. To this end, a simultaneous equation model (SEM) was applied through a Weighted Two Stage Least Squares (W2SLS) estimation method to different countries (21 cases) with business relations over the period from Q1 2000 to Q4 2015. In the case of oil-exporting countries—consisting of Iran, Russian Federation, UAE, Indonesia, and Kazakhstan—the findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian nations (Japan; People's Republic of China; Republic of Korea; Viet Nam; Taipei China; Singapore; and Hong Kong, China); Commonwealth of Independent States (CIS) (Ukraine and Belarus) and others (the United States, India, and Turkey). The results showed that all these countries importing oil face a negative supply shock, except Turkey which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.

AB - This study is an attempt to ascertain how oil price shock can affect a trade-linked system via monetary variables. To this end, a simultaneous equation model (SEM) was applied through a Weighted Two Stage Least Squares (W2SLS) estimation method to different countries (21 cases) with business relations over the period from Q1 2000 to Q4 2015. In the case of oil-exporting countries—consisting of Iran, Russian Federation, UAE, Indonesia, and Kazakhstan—the findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian nations (Japan; People's Republic of China; Republic of Korea; Viet Nam; Taipei China; Singapore; and Hong Kong, China); Commonwealth of Independent States (CIS) (Ukraine and Belarus) and others (the United States, India, and Turkey). The results showed that all these countries importing oil face a negative supply shock, except Turkey which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.

KW - Crude oil price

KW - Direct and indirect effect of oil shocks

KW - Trade linkage

UR - http://www.scopus.com/inward/record.url?scp=85069572014&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85069572014&partnerID=8YFLogxK

U2 - 10.1016/j.enpol.2019.07.008

DO - 10.1016/j.enpol.2019.07.008

M3 - Article

AN - SCOPUS:85069572014

JO - Energy Policy

JF - Energy Policy

SN - 0301-4215

M1 - 110872

ER -