Oil price shocks and trade imbalances

Crude oil trade and current account deficits

“…The extent and timing of the near-term response of the trade balance within an oil-importing nation to energy price changes depend upon the sources of the shock and the various transmission mechanisms (Kilian et al, 2009;Le and Chang, 2013). Geopolitical and military events as well as sudden, rapid demand growth have been the primary reasons for past oil price shocks that have significantly shifted wealth between oil-importing and oil-exporting nations.…”

“…Oil price movements change the prices and quantities of tradable goods and services and alter external portfolio positions and asset prices (Kilian et al, 2009;Le and Chang, 2013). Higher oil costs are transmitted to the price of imported goods and services in all countries and lead to higher interest rates if monetary authorities try to moderate the building inflation rate.…”

Macroeconomic impacts of oil price shocks in Asian economies

“…1 The main contribution of this paper is to exclusively examine Asian countries while distinguishing the effects of oil shocks according to their type, compared to the previous studies on Asian countries (e.g., Abeysinghe, 2001;Cunado and Perez de Gracia, 2005;Ran and Voon, 2012;Le and Chang, 2013). More precisely, we estimate a structural vector autoregressive (SVAR) model and distinguish between oil price innovations caused by (1) exogenous disruptions in the oil supply, (2) an increase in oil demand due to strong global economic activity, and (3) higher demand specifically for oil due to speculative or precautionary motives.…”

The Influence of Oil Price Shocks on China's Macroeconomy: A Perspective of International Trade

“…It is also the case for Zhang & Xu(2010). Le & Chang (2013) study the relationship between oil price shocks and trade imbalances, and find that for net oil importing economies, unfavourable outcomes are associated with oil price shocks.…”