Are the macroeconomic effects of oil-price changes symmetric?

Tatom, John A.

doi:10.1016/0167-2231(88)90030-9

Cited by 67 publications

(46 citation statements)

References 19 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Contrarily, higher oil prices cause to decrease value of currency of an oil-importing country as its currency's supply increases in the international market. Moreover, some studies found that the actions by monetary authority are likely to elucidate the effect of changing oil price on an economy (Clarida, Gali, & Gertler, 1997;Tatom, 1988;Shahbaz et al, 2017). As oil price shocks affect real economy and overall price level, central banks generally face policy challenges in stabilizing the price level and output, simultaneously.…”

Section: Introductionmentioning

confidence: 99%

Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region

2019

View full text Add to dashboard Cite

show abstract

Section: Introductionmentioning

confidence: 99%

Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region

2019

View full text Add to dashboard Cite

show abstract

“…Thus, there is a wealth transfer from oil importing countries to oil exporting countries, leading to a fall of the purchasing power of firms and households in oil importing countries (see Dohner, 1981;Mork et al, 1994). The potential reduction of output comes from the classic supply-side effect according to which rising oil prices are indicative of the reduced availability of a basic input to production, consequently there is a rise in cost production, and the growth of output and productivity are slowed (see, among others, Abel and Bernanke, 2001;Barro, 1984;Brown and Yücel, 1999;Rasche and Tatom, 1981;Tatom, 1988). vestment climate.…”

Section: Introductionmentioning

confidence: 99%

The puzzle of asymmetric effects of oil: New results from international stock markets

Ramos

Veiga

2011

2011 8th International Conference on the European Energy Market (EEM)

View full text Add to dashboard Cite

Previous work has documented that oil price changes have nonlinear effects in the economy and in stock market returns. We show that the nonlinear effects are different depending on whether countries are energy dependent or not. While price soars seem to have a negative effect on the stock markets of oil energy dependent countries, they have a positive effect on the stock markets of oil exporting countries. Stock market returns are negatively affected by oil price volatility in energy dependent countries and positively in oil exporting countries. Moreover, we find bi-directional effects between oil price increases and some oil volatility measures that can be reinforced with volatility feedback. The asymmetric effects found in oil dependent and oil exporting countries seem to fit into the offset mechanism proposed in the literature where oil price shocks interact both with oil price volatility and the economy. The results are also consistent with the finding that oil exporting countries benefit economically from oil price hikes.

show abstract

“…Other authors (for instance, Bernanke, 1983 andVan Soest et al, 2000) have underlined the importance of uncertainty: in period characterized by oil price volatility because firms are not sure about the future movements of oil prices they will have an incentive to postpone investment decisions. Several economists (Tatom -1988and 1993, Bernanke, Gentler and Watson -BGW -1997 pointed out the monetary authority behavior as a possible explanation for the economic effects of oil price shocks. Since, as we have seen, an oil price shock has the effect to influence the real economy and inflation in different ways, central banks usually experience difficulties in stabilising inflation and production at the same time.…”

Section: Introductionmentioning

confidence: 99%

Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries

Manera

Cologni

2005

SSRN Journal

View full text Add to dashboard Cite

SummarySharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries. Moreover, the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries. While several authors have considered the direct channels of transmission of energy price increases, other authors have argued that the economic downturns arose from the monetary policy response to the inflation presumably caused by oil price increases. In this paper a structural cointegrated VAR model has been considered for the G-7 countries in order to study the direct effects of oil price shocks on output and prices and the reaction of monetary variables to external shocks. Empirical analysis shows that, for most of the countries considered, there seems to be an impact of unexpected oil price shocks on interest rates, suggesting a contractionary monetary policy response directed to fight inflation. In turn, increases in interest rates are transmitted to real economy by reducing output growth and the inflation rate.

show abstract

Are the macroeconomic effects of oil-price changes symmetric?

Cited by 67 publications

References 19 publications

Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region

Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region

The puzzle of asymmetric effects of oil: New results from international stock markets

Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries

Contact Info

Product

Resources

About