Anticipated and Unanticipated Oil Price Increases and the Current Account
This paper examines the current-account response to anticipated future increases in real oil prices as well as to unexpected increases which may be temporary or permanent in nature. The analysis is conducted using an intertemporal two-period model of a small open economy which produces both traded and nontraded goods and imports its oil. The paper identifies the channels through which various types of oil price increases affect the current account. The inclusion of nontraded investment and consumer goods permits oil price increases to generate intertemporal and static substitution effects in production and consumption which alter net international saving. Moreover, the relative oil-value-added ratio in the traded and nontraded sectors plays a crucial role in shaping these substitution effects and hence the current-account response.
|Date of creation:||Sep 1981|
|Date of revision:|
|Publication status:||published as Marion, Nancy Peregrim. "Nontraded Goods, Oil Price Increases and the Current Account." Journal of International Economics, Vol. 16, No. 1/2, (February 1984), pp. 29-44.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Ronald E. Findlay & Carlos Alfredo Rodriguez, 1977. "Intermediate Imports and Macroeconomic Policy under Flexible Exchange Rates," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 208-17, May.
- Jeffrey D. Sachs, 1980. "Energy and Growth under Flexible Exchange Rates: A Simulation Study," NBER Working Papers 0582, National Bureau of Economic Research, Inc.
- Berndt, Ernst R & Wood, David O, 1979. "Engineering and Econometric Interpretations of Energy-Capital Complementarity," American Economic Review, American Economic Association, vol. 69(3), pages 342-54, June.
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- Obstfeld, Maurice, 1980.
"Intermediate imports, the terms of trade, and the dynamics of the exchange rate and current account,"
Journal of International Economics,
Elsevier, vol. 10(4), pages 461-480, November.
- Maurice Obstfeld, 1980. "Intermediate Imports, the Terms of Trade, and the Dynamics of the Exchange Rate and Current Account," NBER Working Papers 0540, National Bureau of Economic Research, Inc.
- Buiter, Willem H, 1978. "Short-run and Long-run Effects of External Disturbances under a Floating Exchange Rate," Economica, London School of Economics and Political Science, vol. 45(179), pages 251-72, August.
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