Anticipated and Unanticipated Oil Price Increases and the Current Account

Marion, Nancy Peregrim

doi:10.3386/w0759

Cited by 5 publications

(3 citation statements)

References 7 publications

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“…The "accounting framework" for the analysis of exchange rate dynamics developed by Dooley and Isard (1981) and Isard (1983) also incorporates these elements. Models developed by Marion (1981), Obstfeld (1981, Sachs (1981), and Helpman and Razin (1983) consider the effect of temporary expected disturbances in the current account of the behavior of the exchange rate.…”

Section: 2mentioning

confidence: 99%

Asset Markets, Exchange Rates and the Balance of Payments

Frenkel

Mussa

1984

110

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Issues discussed in this context include purchasing power parities, nontraded goods, the real exchange rate, currency substitution and the interaction between real and monetary factors in effecting exchange rates. The paper proceeds with a presentation of a more general framework that views the question of exchange rate determination as part of the general theory of the determination of asset prices, and which highlights the unique role of expectations. The general framework is then applied to characterize the interaction between the balance of payments and the equilibrium real exchange rate. The paper concludes with a brief discussion of some empirical issues of exchange rate analysis.

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Section: 2mentioning

confidence: 99%

Asset Markets, Exchange Rates and the Balance of Payments

Frenkel

Mussa

1984

110

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“…For partid. equilibrium analyses of effects of oil price increases that emphasize intertemporal aspects, see Bruno (1981), Marion (1981), Obstfeld (1980), Sachs (1981), and Svensson (1981). Dixit (1981) presents a very neat intertemporal general equilibrium model of trade in goods, capital, and oil , hut concentrates on othe r Issues than those of the present paper.…”

Section: Resultsmentioning

confidence: 95%

Structural Differences and Macroeconomic Adjustment to Oil Price Increases in a Three-Country Model

Marion

Svensson

1982

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In this paper a three-country model based on intertemporal maximizing behavior is constructed in order to analyze the effects of oil price increases on welfare levels and trade balance positions.The model can also be used to assess the effects of oil price increases on the world interest rate, on the final goods terms of trade between oil importers (what is sometimes called the real exchange rate), and on output, investment and savings levels, oil imports3 wages, and consumption at each date.The analysis highlights the role of structural asymmetries between oil importers in accounting for differences in trade balance responses. A number of structural differences are isolated in turn in order to determine their influence on the final goods terms of trade, which is the key factor in affecting relative trade balance positions.

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“…The results of transitory and anticipated terms-of-trade shocks have been analyzed in two-period models by Marion (1981), Sachs (1981), and Svensson and Razin (l981)..1 As is illustrated below, however, extension of the analysis to an infinite-horizon setting leads to a richer description of the induced current-account paths. Obstfeld (1982) and Svensson and RAzin (1981) have analyzed the effects of permanent unanticipated terms-of-trade changes using infinite horizon models that emphasize the role of subjective time preference in individual saving decisions.…”

Section: Introductionmentioning

confidence: 99%

Transitory Terms-of-Trade Shocks and the Current Account: The Case of Constant Time Preference

Obstfeld

1982

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The paper uses an intertemporal perfect-foresight optimizing model to analyze the effect of transitory terms-of-trade shocks on a small open economy's current-account and utility time profiles. An adverse terms-of-trade shift known to be temporary induces the economy to run down its stock of external assets in the period before the terms of trade revert to their initial level. Subsequently, the assets consumed during this period are reaccumulated. The current-account response is due only in part to a desire to smooth out the future consumption stream. In additi on, households know that the real value of any debt incurred while the terms of trade are unfavorable will be reduced sharply when the terms of trade improve. This opportunity for intertemporal price speculation causes the time path of instantaneous utility to be discontinuous•

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Anticipated and Unanticipated Oil Price Increases and the Current Account

Cited by 5 publications

References 7 publications

Asset Markets, Exchange Rates and the Balance of Payments

Asset Markets, Exchange Rates and the Balance of Payments

Structural Differences and Macroeconomic Adjustment to Oil Price Increases in a Three-Country Model

Transitory Terms-of-Trade Shocks and the Current Account: The Case of Constant Time Preference

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