IDEAS home Printed from https://ideas.repec.org/a/pal/imfecr/v64y2016i2p303-318.html

The Trade Consequences of Pricey Oil

Author

Listed:
  • David von Below
  • Pierre-Louis Vézina

Abstract

This paper examines the trade and trade-induced welfare effects of oil prices. Using a gravity model of trade, the paper finds that the distance elasticity of trade significantly increases with the oil price. This suggests that high oil prices make trade less global, as they affect longer shipping routes more. The paper estimates that an increase in the oil price from $100 to $200 (in 2014 US$) would have similar trade effects as an import tariff around 17 percent for two countries 10,000 km away. This is akin to a 55 percent increase in shipping distance. This trade reduction would lower welfare by 0.03 percent in the average non-oil-exporting country.

Suggested Citation

  • David von Below & Pierre-Louis Vézina, 2016. "The Trade Consequences of Pricey Oil," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 303-318, June.
    • Handle: RePEc:pal:imfecr:v:64:y:2016:i:2:p:303-318
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/imfer/journal/v64/n2/pdf/imfer20163a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/imfer/journal/v64/n2/full/imfer20163a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2023. "The impact of oil prices on world trade," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 444-463, May.
    2. Ashutosh Kar & Pratyay Ranjan Datta, 2020. "Logistics Cost Dynamics in International Business: A Causal Approach," Foreign Trade Review, , vol. 55(4), pages 478-495, November.
    3. Mandelman, Federico & Yu, Yang & Zanetti, Francesco & Zlate, Andrei, 2024. "Slowdown in Immigration, Labor Shortages, and Declining Skill Premia," CEPR Discussion Papers 19212, C.E.P.R. Discussion Papers.
    4. Lashkaripour, Ahmad, 2020. "Weight-based quality specialization," Journal of International Economics, Elsevier, vol. 127(C).
    5. Ayaz Zeynalov, 2017. "The gravity of institutions in a resource-rich country: the case of Azerbaijan," International Economics and Economic Policy, Springer, vol. 14(2), pages 239-261, April.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. The Trade Consequences of Pricey Oil (IMF Economic Review 2016) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:imfecr:v:64:y:2016:i:2:p:303-318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.