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Oil price fluctuations and their impact on oil-exporting emerging economies
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Bo Yang
Economic Modelling, Volume: 132, Start page: 106665
Swansea University Authors:
Rosen Chowdhury , Bo Yang
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DOI (Published version): 10.1016/j.econmod.2024.106665
Abstract
How do oil price fluctuations affect economic activity and policy in the context of oil-exporting emerging economies? Past research suggests that the output responses to oil price innovations are asymmetric in nature but does not directly test the asymmetry in the government expenditure adjustments...
| Published in: | Economic Modelling |
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| ISSN: | 0264-9993 |
| Published: |
Elsevier BV
2024
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa65537 |
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| Abstract: |
How do oil price fluctuations affect economic activity and policy in the context of oil-exporting emerging economies? Past research suggests that the output responses to oil price innovations are asymmetric in nature but does not directly test the asymmetry in the government expenditure adjustments triggered by the shock. Moreover, many studies quantifying these asymmetric responses are fraught with methodological concerns. This paper assesses the empirical relevance of such asymmetries by studying how output and government expenditure respond to oil price shocks. Our estimation, employing unbiased methodologies, allows us to be agnostic regarding asymmetries in the responses depending on the direction and size of the shock. Using data for a diverse group of emerging economies, we find substantial evidence for the presence of asymmetries. Country-specific factors and/or fiscal stabilization incentives are possible explanations for the asymmetric responses. We draw policy recommendations for understanding the growth process specific to resource-rich emerging economies. |
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| Keywords: |
Asymmetries; Oil price shocks; Censored-regressor nonlinear models; Emerging economies |
| College: |
Faculty of Humanities and Social Sciences |
| Start Page: |
106665 |