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

Listed author(s):
  • Jean-Pierre Allegret
  • Valérie Mignon
  • Audrey Sallenave

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..

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File URL: http://economix.fr/pdf/dt/2014/WP_EcoX_2014-14.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-14.

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Length: 28 pages
Date of creation: 2014
Handle: RePEc:drm:wpaper:2014-14
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