Asymmetric oil shocks and external balances of major oil exporting and importing countries

Rafiq, Shudhasattwa; Sgro, Pasquale M.; Apergis, Nicholas

doi:10.1016/j.eneco.2016.02.019

Cited by 103 publications

(108 citation statements)

References 63 publications

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“…To investigate the links between oil prices and the trade balances of six African economies, we rely on an empirical framework proposed by Rafiq et al () and consider the following trade balance model:

\log false({TB}_{i, t} false) = β_{0} + β_{1} \log false(P_{t} false) + β_{2} \log false({RER}_{i, t} false) + ε_{t},

where TB i , t represents three measures of external balances—oil, non‐oil and total trade balances—for country i as is done in Rafiq et al (). In this paper, the trade balance for country i is defined as the ratio of value of country i 's exports to value of country i 's imports ( X i / M i ).…”

Section: Models and Methodsmentioning

confidence: 99%

“…Kilian et al () apply a structural VAR (SVAR) technique to various oil‐exporting countries and oil‐importing countries; they discover that crude oil price changes seem to be one of the vital factors influencing external balances. Rafiq et al () recently expand the work of Kilian et al () by employing a non‐linear panel method to investigate an asymmetric response to oil price changes; they reveal that oil price plunges have a positive impact on oil‐exporting countries, whereas a steady oil price has a more favourable impact on oil‐importing countries than a price decline. A crucial weakness of most empirical studies in the second category is that fluctuations in oil prices are assumed to have symmetric impacts.…”

Section: Introductionmentioning

confidence: 99%

“…Otherwise, oil price changes are said to have asymmetric impacts. In fact, since expectations and responses of exporters and importers to an oil price upsurge are highly likely to be different from those to an oil price decline, oil price changes are more likely to affect external balances asymmetrically in the real world as Rafiq et al () argue and demonstrate. Studies to date, however, do not consider an asymmetric response to oil price changes in their empirical analyses and raise questions about the validity of their conclusions.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Asymmetric effects of oil price changes on the balance of trade: Evidence from selected African countries

Baek

Kwon

2019

World Economy

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The main new contribution of this study was to delve into the asymmetric impacts of changes in oil prices on the trade balance in the framework of six major African economies. To tackle this topic carefully, we employ three measures of external balances—oil, non‐oil and total trade balances, and assess the asymmetric response of the external balances of those six economies to oil price changes in the short and long run. Like most previous studies, we first assume the impacts of oil price fluctuations to be symmetric and employ the linear autoregressive distributed lag (ARDL) method to explore the topic. We then separate oil price hikes from oil price plunges and implement the non‐linear ARDL method to reveal that the price of crude oil has a vital role to play in the trade balances for those six African economies. Further, there is evidence of significant asymmetric impacts of oil prices typically on the oil trade balance of Africa's top oil producing countries. For the non‐oil and total trade balances, in contrast, there is little evidence of the asymmetry of oil price changes.

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\log false({TB}_{i, t} false) = β_{0} + β_{1} \log false(P_{t} false) + β_{2} \log false({RER}_{i, t} false) + ε_{t},

Section: Models and Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Asymmetric effects of oil price changes on the balance of trade: Evidence from selected African countries

Baek

Kwon

2019

World Economy

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“…An interesting though controversial observation was made by (Rafiq, Sgro, & Apergis, 2016) that "a decline in oil prices is beneficial to oil exporters due to the quantity effect outweighing the price effect, while for oil importers a stable oil price is more desirable than a price decline. These results are important to take into account if we are to gain a full understanding on the magnitude of the trade and macroeconomic effects of oil price changes and what the policy responses should be.…”

Section: Introductionmentioning

confidence: 99%

The impact of oil price shocks on selected Kazakhstan’s macroeconomic indicators

Akhmedov

2019

Journal of International Studies

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This article studies the correlation between world oil prices and the selected Kazakhstan's macroeconomic variables using the method of vector autoregression (VAR). As expected, the macroeconomic variables under consideration demonstrate a significant correlation with oil price fluctuations. However, the results of the research show a certain discrepancy with the earlier researches, which considered previous negative oil price shock of 2008 in the form of quicker reaction to such shocks. This means that the dependence of Kazakh economy on oil price fluctuations increased since the previous oil price plunge 1. In this regard, it is worth pointing out that none of these researches targeted the relationship between oil prices and Kazakh macro-economy after June 2014, when the last oil price shock began. Another important result is the timeframe during which the influence of oil price shocks is actually significant. These results are important for understanding the processes happening in the economies of Kazakhstan and other oil-exporting countries.

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“…Le and Chang (2013) examine the relationship between oil price shocks and trade balances in Malaysia, Japan and Singapore, and they find that oil prices do impact oil importers' and oil exporters' trade performances differently. Rafiq, Sgro, and Aspergis (2016) examine the effects of oil price shocks on oil exporters' and oil importers' external balances (Jermsittiparsert, 2016;Hassan & Alanazi 2018). They find that an increase in oil prices leads to an improved real oil trade balance, and a decrease in oil prices is found to be beneficial for both total and oil balances in oil exporting countries.…”

Section: Introductionmentioning

confidence: 99%

Formulating and Estimating of Dynamic Nonlinear Model of Korea’s Bilateral Trade Balance

Jung¹

2019

IJFR

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This paper formulates and estimates the dynamic nonlinear trade model for Korea. We use monthly time series data for the period from 2000 to 2017. We employ EGARCH (1,1)-GED model which allows the positive and negative shocks to have asymmetric influences on volatility. The Johansen co-integration test is applied and finds the long run relationship among oil price, exchange rate and trade balance does exist. With respect to Indonesia as one of oil exporting countries, we find that an increase in oil prices leads to a declined trade balance as imports rise more than exports. Appreciation in IDR also leads to a declined trade balance as exports fall more than imports. For Korea as one of oil importing countries, an increase in oil prices leads to an improved trade balance as exports rise more than imports. Appreciation in KRW leads to a declined trade balance as exports fall more than imports. Oil price volatility reduces trade balance both in Indonesia and Korea. Oil price has negative effects on Indonesia’s trade balance and positive effects on Korea’s trade balance. Indonesian and Korean currency appreciation against US dollar have a negative impact on trade balance in Indonesia and Korea respectively. This information will contribute to Indonesian and Korean policy makers in making policies for their trade.

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Asymmetric oil shocks and external balances of major oil exporting and importing countries

Cited by 103 publications

References 63 publications

Asymmetric effects of oil price changes on the balance of trade: Evidence from selected African countries

Asymmetric effects of oil price changes on the balance of trade: Evidence from selected African countries

The impact of oil price shocks on selected Kazakhstan’s macroeconomic indicators

Formulating and Estimating of Dynamic Nonlinear Model of Korea’s Bilateral Trade Balance

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