IDEAS home Printed from https://ideas.repec.org/p/fda/fdaeee/215.html

Oil Shocks and the Business Cycle in Europe

Author

Listed:
  • Baltasar Manzano
  • Carlos de Miguel
  • José Mô Martín Moreno

Abstract

This paper analyzes the effects of oil price shocks on the business cycle of the EU-15 countries using a standard dynamic general equilibrium model for a small open economy in which oil is included as an imported productive input. The results show that oil shocks can account for a significant percentage of GDP fluctuations in many of those countries. Furthermore, we show that the increases in the relative price of oil had a negative effect on welfare, particularly in southern European countries, which are historically associated with a lax monetary policy during oil crisis.

Suggested Citation

  • Baltasar Manzano & Carlos de Miguel & José Mô Martín Moreno, "undated". "Oil Shocks and the Business Cycle in Europe," Studies on the Spanish Economy 215, FEDEA.
    • Handle: RePEc:fda:fdaeee:215
    as

    Download full text from publisher

    File URL: https://documentos.fedea.net/pubs/eee/eee215.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Olson, Mancur, 1988. "The Productivity Slowdown, the Oil Shocks, and the Real Cycle," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 43-69, Fall.
    2. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, December.
    3. Finn, Mary G., 1995. "Variance properties of Solow's productivity residual and their cyclical implications," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1249-1281.
    4. repec:aen:journl:1994si-a02 is not listed on IDEAS
    5. repec:aen:journl:2003v24-02-a02 is not listed on IDEAS
    6. Mork, Knut Anton, 1989. "Oil and Macroeconomy When Prices Go Up and Down: An Extension of Hamilton's Results," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 740-744, June.
    7. Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
    8. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-417, June.
    9. Kim, In-Moo & Loungani, Prakash, 1992. "The role of energy in real business cycle models," Journal of Monetary Economics, Elsevier, vol. 29(2), pages 173-189, April.
    10. Mendoza, Enrique G, 1991. "Real Business Cycles in a Small Open Economy," American Economic Review, American Economic Association, vol. 81(4), pages 797-818, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Amin Sakib & Marsiliani Laura, 2015. "Energy price shocks in dynamic stochastic general equilibrium: the case of Bangladesh," Review of Business and Economics Studies, CyberLeninka;Федеральное государственное образовательное бюджетное учреждение высшего профессионального образования «Финансовый университет при Правительстве Российской Федерации» (Финансовый университет), issue 4, pages 12-21.
    2. repec:aen:journl:ej38-6-martinmoreno is not listed on IDEAS
    3. Tarek Atallah & Jorge Blazquez, 2015. "Quantifying the impact of coal on global economic growth and energy productivity in the early 21st century," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2015(2), pages 93-106.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carlos de Miguel & Baltasar Manzano & Jose M. Martin Moreno, "undated". "Perturbaciones petroliferas y fluctuaciones agregadas," Studies on the Spanish Economy 134, FEDEA.
    2. repec:aen:journl:ej38-6-martinmoreno is not listed on IDEAS
    3. Meenagh, David & Minford, Patrick & Oyekola, Olayinka, 2015. "Oil Prices and the Dynamics of Output and Real Exchange Rate," Cardiff Economics Working Papers E2015/18, Cardiff University, Cardiff Business School, Economics Section.
    4. Naohisa Hirakata & Nao Sudo, 2009. "Accounting for Oil Price Variation and Weakening Impact of the Oil Crisis," IMES Discussion Paper Series 09-E-01, Institute for Monetary and Economic Studies, Bank of Japan.
    5. repec:aen:journl:2009v30-01-a03 is not listed on IDEAS
    6. Meenagh, David & Minford, Patrick & Oyekola, Olayinka, 2015. "Energy Business Cycles," Cardiff Economics Working Papers E2015/19, Cardiff University, Cardiff Business School, Economics Section.
    7. Andrian, Leandro Gaston, 2010. "Essays on energy economics: Microeconomic and macroeconomic dimensions," ISU General Staff Papers 201001010800002725, Iowa State University, Department of Economics.
    8. Amano, R. A. & van Norden, S., 1998. "Oil prices and the rise and fall of the US real exchange rate," Journal of International Money and Finance, Elsevier, vol. 17(2), pages 299-316, April.
    9. Munechika Katayama, 2013. "Declining Effects of Oil Price Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 977-1016, September.
    10. Tarek Ghazouani, 2020. "Energy Price Shocks and Financial Market Integration: Evidence from New Keynesian Model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(1), pages 13-32, February.
    11. Luís Francisco Aguiar-Conraria & Yi Wen, 2005. "Understanding the Impact of Oil Shocks," NIPE Working Papers 2/2005, NIPE - Universidade do Minho.
    12. Schwark, Florentine, 2014. "Energy price shocks and medium-term business cycles," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 112-121.
    13. repec:aen:journl:ej34-3-08 is not listed on IDEAS
    14. Eduardo Giménez & José Martín-Moreno, 2013. "Transmission mechanisms of real stochastic shocks in a small open economy," International Economics and Economic Policy, Springer, vol. 10(2), pages 217-245, June.
    15. Ben S. Bernanke & Mark Gertler & Mark Watson, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
    16. Mary G. Finn, 1991. "Energy price shocks, capacity utilization and business cycle fluctuations," Discussion Paper / Institute for Empirical Macroeconomics 50, Federal Reserve Bank of Minneapolis.
    17. Ozdemir, Zeynel Abidin & Gokmenoglu, Korhan & Ekinci, Cagdas, 2013. "Persistence in crude oil spot and futures prices," Energy, Elsevier, vol. 59(C), pages 29-37.
    18. Lang, Korbinian & Auer, Benjamin R., 2020. "The economic and financial properties of crude oil: A review," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    19. Brown, Stephen P. A. & Yucel, Mine K., 2002. "Energy prices and aggregate economic activity: an interpretative survey," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 193-208.
    20. Yusuf Soner Başkaya & Timur Hülagü & Hande Küçük, 2013. "Oil Price Uncertainty in a Small Open Economy," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 168-198, April.
    21. Jo, Soojin & Karnizova, Lilia & Reza, Abeer, 2019. "Industry effects of oil price shocks: A re-examination," Energy Economics, Elsevier, vol. 82(C), pages 179-190.
    22. Mary G. Finn, 1994. "Variance properties of Solow's productivity residual and their cyclical implications," Working Paper 94-01, Federal Reserve Bank of Richmond.
    23. Tweneboah, George & Adam, Anokye M., 2008. "Implications of Oil Price Shocks for Monetary Policy in Ghana: A Vector Error Correction Model," MPRA Paper 11968, University Library of Munich, Germany.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fda:fdaeee:215. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Marta Fernández (email available below). General contact details of provider: https://www.fedea.net .

    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.