The impact of oil price shocks in the Canadian economy: A structural investigation on an oil-exporting economy

Delpachitra, Sarath; Hou, Keqiang; Cottrell, Simon

doi:10.1016/j.eneco.2020.104846

Cited by 23 publications

(6 citation statements)

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“…With the rapid development of the world, the human demand for energy is also increasing, especially for low-cost natural energy such as oil, coal and gas. 1,2 However, nitrogen-containing compounds (NCCs) in fuels (gasoline and diesel), such as pyridine and pyrrole, will lead to NO x emission, reduction of combustion efficiency and increase of CO and particulate emissions during combustion. [3][4][5] Specically, NO x produced by fuel combustion will lead to acid rain, corrode buildings and crops, and change the pH value of soil and rivers.…”

Section: Introductionmentioning

confidence: 99%

Bimetallic CoCu-ZIF material for efficient visible light photocatalytic fuel denitrification

Pan

Lai

et al. 2022

RSC Adv.

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Section: Introductionmentioning

confidence: 99%

Bimetallic CoCu-ZIF material for efficient visible light photocatalytic fuel denitrification

Pan

Lai

et al. 2022

RSC Adv.

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“…It is to be noted that even among advanced economies, the monetary policy response to oil price spikes can significantly affect macroeconomic variables. In particular, Delpachitra et al (2020) assert that more than 40% of fluctuations in Canadian domestic production (over four years) are related to the monetary policy channel after the oil shock. At the same time, the Fed's monetary policy has a smaller percentage of the spread of oil price shocks in the economy.…”

Section: Monetary Policy In Commodity-exporting Economiesmentioning

confidence: 99%

Monetary policy of commodity-dependent economies

Shapoval

2022

VUZF

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This paper deals with the features of monetary policies of commodity-exporting and commodity-dependent economies, using methods of generalization of their instruments. The review of the monetary policy toolkit of advanced and emerging economies during the 2020–2021 pandemic demonstrates that central banks' reaction has been cautious in adopting asset purchase programs, often limiting their purchases to a smaller scale along with a narrow set of assets. Nevertheless, the application of credit support programs implemented in 2008 and a new set of credit programs for additional segments of the economy facilitated recovery.Central banks of emerging economies started raising key rates in 2021, and in 2022 advanced economies also began conducting tighter monetary policies to combat inflationary pressures of 2021–2022. The impact of the war in Ukraine on commodity markets exacerbated rising сommodity prices along with accommodative monetary policy, has led to stagflation in 2022. EU is among the most affected by inflation caused by the dependence on Russian oil and gas, and simultaneously by the recovery of internal demand after the pandemic. In the first half of 2022, the ECB’s monetary instruments remained asset purchases and lifting key rates. The risk of distracting monetary policy priorities from the green transition due to commodities price upturn is noted.For commodity-exporting emerging economies, shocks of raw materials prices become factors of business cycle fluctuations. The opportunities for effective monetary policy of commodity-exporting economies depend on exchange rate regimes and fiscal policy. The central bank's reaction to the rise in commodity prices is a tightening of monetary policy and a fall in prices – a weakening, suggesting that stabilizing output is more important than inflation targeting.The sharp decline in commodity prices from mid-2014 to early 2016 demanded significant fiscal adjustments and monetary policy tightening measures among commodity export-dependent economies. Compared to the oil crises of 1973 and 1979, today's oil price increase is relatively minor, the energy intensity of GDP is much less, and there is a price upturn in a much broader range of energy and agricultural commodities. Monetary goals and instruments are now much better defined due to the recognition of confidence as one of the monetary instruments in managing inflation expectations.

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“…While foreign U.S polices is of lesser importance in propagating oil price shocks on an oil-exporting economy through the international channel. [Delpachitra et al, 2020].…”

Section: Impact On Other Economic Aspectsmentioning

confidence: 99%

Macroeconomic effects of oil price shocks on the major oil-exporting countries

Hassan

2022

Preprint

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Crude oil remains the primary source of energy, accounting for almost a third of global energy production. The international crude oil prices are highly volatile and varies far more frequently than any other energy commodity, this carries serious risks for the oil exporting economies. Positive oil price shock implies an increase in wealth transfers from oil importing economies to the oil exporting economy. The falling oil prices triggers a trade imbalance, balance of payments as the foreign reserves starts to shrink and it widens the fiscal deficit for energy exporting economies. Most of the oil producing companies are state owned in oil exporting economies. The national government is the main beneficiary from the oil export, its direct revenues, royalty, value added tax and windfall taxes associated with oil production. There are many macroeconomic indicators that are highly affected by the crude price uncertainty. The paper studied the findings from the previous research literatures on the oil price shocks and its consequences to the economy. Historical oil price shocks from the time of modern-day oil-trading, the reasons of the price shocks and the price determination criteria is discussed in this paper. The study examined the impact of oil price fluctuation twenty-nine (29) major oil exporting economies, using the structural auto-vector regression model (SVAR) for a period of three decades from 1991 –2020. Countries that are net oil-exporting economies are chosen, with more than $2 billion annual crude oil exports. Countries are divided in to three main groups depending upon the development phase of the economy such as developed, transitional and developing economies. While, developing countries are further sub-divided into five groups regionally. After the selection empirical analysis is performed on annual data for the exports (EXP), foreign exchange reserves (RES), nominal effective exchange rate (EXC), fiscal balance (FisBal), and GDP growth (GDPg). Some preliminary analysis is done with the data to find the unit root, optimal lag for each individual country. Then, an impulse response shock to international oil price is induced to measure the behavior of each macroeconomic variable in response to the oil price shock. The results of it varies for each country, but within the group it is found that many countries follow the same path to normality that are in same region. Based on outcomes of variance decomposition, the findings show serious vulnerability of transitional and developing economies to the macroeconomic indicator variance as a result of oil price shock. Exports, reserves and fiscal balance for Africa, Middle East and Latin American economies are the hardest hit by crude price uncertainty. Exchange rate for Africa, North Africa and Latin America is the most affected by price fluctuations. Economic growth in the transitional economies is contributed by the oil sector revenues. In fact, the growth in the Middle East and transitional economies are severely impacted during the crude price fluctuation from the findings. The fiscal structure of the government is built around tax revenues from the oil-economy in developing energy exporting countries. The price slump after COVID-19, when the world fuel demand was standstill, could have been reduced by some alter policies and decision making of the OPEC and governments. Thus, energy exporters should attempt the diversiﬁcation of their fiscal revenue structure, expand the taxation, privatize the state-institute, encourage alternate non-oil exports and each energy exporter should strictly follow the OPEC cartel quota for individual member in order to cushion the economy when the falling oil demand leads to reduce sales and export revenues.

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The impact of oil price shocks in the Canadian economy: A structural investigation on an oil-exporting economy

Cited by 23 publications

References 30 publications

Bimetallic CoCu-ZIF material for efficient visible light photocatalytic fuel denitrification

Bimetallic CoCu-ZIF material for efficient visible light photocatalytic fuel denitrification

Monetary policy of commodity-dependent economies

Macroeconomic effects of oil price shocks on the major oil-exporting countries

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