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Do Oil Prices Matter? The Case of a Small Open Economy

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Author Info

  • Joao Tovar Jalles

    (Faculty of Economics and Politics, University of Cambridge)

Abstract

This paper empirically evaluates the impact and effect of oil price fluctuations and shocks on French aggregate economic performance, industrial production index and inflation rate. Our methodology makes use of a multivariate VAR approach to analyse the stability and magnitude of this system by adopting different oil price specifications, together with a robustness check through the estimation of a St.Louis-type equation. We adopt several oil price specifications. Our results show that the main French macroeconomic aggregate variables have become progressively less reactive to oil price fluctuations and that the adjustment towards equilibrium levels have been done increasingly faster.

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Bibliographic Info

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 10 (2009)
Issue (Month): 1 (May)
Pages: 65-87

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Handle: RePEc:cuf:journl:y:2009:v:10:i:1:p:65-87

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Related research

Keywords: Oil price fluctuations; Multivariate VAR; Causality; Impulse Response; St.Louis Equation;

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References

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  1. Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-51, September.
  2. Cunado, Juncal & Perez de Gracia, Fernando, 2003. "Do oil price shocks matter? Evidence for some European countries," Energy Economics, Elsevier, vol. 25(2), pages 137-154, March.
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  11. Lutz Kilian, 2008. "Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy?," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 216-240, May.
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  18. Hamilton, James D., 1996. "This is what happened to the oil price-macroeconomy relationship," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 215-220, October.
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Cited by:
  1. Liu, Luke, 2011. "Securitization and moral hazard: Does security price matter?," MPRA Paper 35004, University Library of Munich, Germany.
  2. Gaowang Wang & Heng-fu Zou, 2012. "Economic Globalization, Mercantilism and Economic Growth," CEMA Working Papers 548, China Economics and Management Academy, Central University of Finance and Economics.
  3. Hasanat Shah, Syed & Li, Jun Jiang & Hasanat, Hafsa, 2013. "The impact of Oil Price and Oil Price Fluctuation on Growth Exports and Inflation in Pakistan," MPRA Paper 52560, University Library of Munich, Germany.

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