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Oil price shocks and global imbalances: Lessons from a model with trade and financial interdependencies

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  • Jean-Pierre Allegret
  • Valérie Mignon
  • Audrey Sallenave

Abstract

The aim of this paper is to investigate oil price shocks' effects and their associated transmission channels on global imbalances. To this end, we rely on a Global VAR approach that allows us to account for trade and Financial interdependencies between countries. Considering a sample of 30 oil-exporting and importing economies over the 1980-2011 period, we show that the nature of the shock-demand-driven or supply-driven matters in understanding the effects of oil price shocks on global imbalances. In addition, we evidence that the main adjustment mechanism to oil shocks is based on the trade channel, the valuation channel being at play only on the short run..

Suggested Citation

  • Jean-Pierre Allegret & Valérie Mignon & Audrey Sallenave, 2014. "Oil price shocks and global imbalances: Lessons from a model with trade and financial interdependencies," EconomiX Working Papers 2014-14, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2014-14
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    More about this item

    Keywords

    oil prices; global imbalances; global VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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