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External Capital Structures and Oil Price Volatility

Listed author(s):
  • John D. Burger
  • Alessandro Rebucci

    ()

  • Francis E. Warnock
  • Veronica Cacdac Warnock

This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.

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File URL: http://www.iadb.org/research/pub_hits.cfm?pub_id=IDB-WP-107&pub_file_name=pubIDB-WP-107.pdf
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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4667.

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Date of creation: May 2010
Handle: RePEc:idb:wpaper:4667
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