Taking Stock: Who Benefited from the Oil Price Shocks?

May 4, 2017

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Format: Chicago

Diego A. Cerdeiro, and Dmitry Plotnikov. Taking Stock: Who Benefited from the Oil Price Shocks?, (USA: International Monetary Fund, 2017) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The effect that the recent decline in the price of oil has had on growth is far from clear, with many observers at odds to explain why it does not seem to have provided a significant boost to the world economy. This paper aims to address this puzzle by providing a systematic analysis of the effect of oil price shocks on growth for 72 countries comprising 92.8% of world GDP. We find that, on net, shocks driving the oil price in 2015 shaved off 0.2 percentage points of growth for the median country in our sample, and 0.17 percentage points in GDP-weighted terms. While increases in oil supply and shocks to oil-specific demand actually boosted growth in 2015 (by about 0.2 and 0.4 percentage points, respectively), weak global demand more than offset these gains, reducing growth by 0.8 percentage points. Counterfactual simulations for the 72 countries in our sample underscore the importance of diversification, rather than low levels of openness, in shielding against negative shocks to the world economy.

Subject: Commodities, Economic theory, Export diversification, International trade, Oil, Oil prices, Oil production, Prices, Production, Supply shocks

Keywords: Aggregate demand demand shock, Economic activity, Export diversification, Global, Growth terms, Oil, Oil demand, Oil demand shock, Oil exporter, Oil price, Oil price decline, Oil price shock, Oil price slump, Oil prices, Oil production, Oil supply, Output, Price, Price of oil, Supply shocks, World demand, World demand shocks, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/104
Stock No:

WPIEA2017104
ISBN:

9781475595918
ISSN:

1018-5941

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