Macroeconomics Effect of Oil Price Shocks

Elnaz Hajebi^1, and S. Yaser Samadi²

¹Department of Economics, Ferdowsi University of Mashhad, Iran

²School of Mathematical and Statistical Sciences, Southern Illinois University, Carbondale, IL, USA

Cite this paper:
Elnaz Hajebi and S. Yaser Samadi. Macroeconomics Effect of Oil Price Shocks. Journal of Finance and Economics. 2025; 13(3):94-100. doi: 10.12691/jfe-13-3-2

Abstract

In an interconnected world, fluctuations in global oil prices significantly impact the economies of oil-exporting countries. This study investigates the effects of oil price shocks on the macroeconomic variables of major Organisation for Economic Co-operation and Development (OECD) oil-exporting countries from 1990 to 2022 using the panel vector autoregressive (PVAR) approach. The model comprises four variables to analyze the heterogeneous dynamic response to oil price shocks. The results indicate that oil price shocks negatively affect the economic growth rate and interest rates. The impact on inflation is positive but decreases after several periods. The shock's effect on the exchange rate is negative at first and slightly turns to positive thereafter.

Keywords:
Oil Price Shock Oil-Exporting Countries Macroeconomics OECD Panel VAR

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