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Structural Differences and Macroeconomic Adjustment to Oil Price Increases in a Three-Country Model


  • Nancy Peregrim Marion
  • Lars E.O. Svensson


In this paper a three-country model based on intertemporal maximizing behavior is constructed in order to analyze the effects of oil price increases on welfare levels and trade balance positions. The model can also be used to assess the effects of oil price increases on the world interest rate, on the final goods terms of trade between oil importers (what is sometimes called the real exchange rate), and on output, investment and savings levels, oil imports, wages, and consumption at each date. The analysis highlights the role of structural asymmetries between oil importers in accounting for differences in trade balance responses. A number of structural differences are isolated in turn in order to determine their influence on the final goods terms of trade, which is the key factor in affecting relative trade balance positions.

Suggested Citation

  • Nancy Peregrim Marion & Lars E.O. Svensson, 1982. "Structural Differences and Macroeconomic Adjustment to Oil Price Increases in a Three-Country Model," NBER Working Papers 0839, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0839
    Note: ITI IFM

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    References listed on IDEAS

    1. Nancy Peregrim Marion, 1981. "Anticipated and Unanticipated Oil Price Increases and the Current Account," NBER Working Papers 0759, National Bureau of Economic Research, Inc.
    2. 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.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, May.
    4. Svensson, Lars E O & Razin, Assaf, 1983. "The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 97-125, February.
    5. Bruno, M., 1973. "Protection and tariff change under general equilibrium," Journal of International Economics, Elsevier, vol. 3(3), pages 205-225, August.
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    Cited by:

    1. Michael Bruno, 1983. "Petrodollars and the Differential Growth Performance of Industrial and Middle-Income Countries in the 1970s," NBER Working Papers 1056, National Bureau of Economic Research, Inc.
    2. Nancy Peregrim Marion & Lars E. O. Svensson, 1984. "Adjustment to Expected and Unexpected Oil Price Changes," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 15-31, February.
    3. Philippe Ithurbide, 1987. "Les restrictions volontaires d'exportations," Revue Économique, Programme National Persée, vol. 38(1), pages 25-54.
    4. Stanley Fischer, 1983. "Supply Shocks, Wage Stickiness, and Accommodation," NBER Working Papers 1119, National Bureau of Economic Research, Inc.

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