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    The Response of Macro Variables of Emerging and Developed Oil Importers to Oil Price Movements

    Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Abadi, Majid Mohammadi Hossein; Farboudmanesh, Rosa | June 2015
    Abstract
    This paper assesses the impact of crude oil price movements on two macro variables—the gross domestic product (GDP) growth rate and consumer price index inflation rate—in the developed economies of the United States and Japan, and an emerging economy, the People’s Republic of China (PRC). These countries were chosen for this research because they are the world’s three largest oil consumers. The main objective of this study is to see whether these economies are still reactive to oil price movements. The results obtained suggest that the impact of oil price fluctuations on the GDP growth of the developed oil importers is much lower than on the GDP growth of the emerging economy. The main reasons for this lie in fuel substitution (higher use of nuclear energy, gas, and renewables), a declining population (for Japan), the shale gas revolution (for the United States), and strategic oil stocks and government-mandated energy efficiency targets in developed economies. All of these factors make developed economies more resistant to oil shocks. On the other hand, the impact of oil price movements on the PRC’s inflation rate was found to be milder than in the two developed countries that were examined. The main cause for this is that the PRC experiences a larger forward shift in its aggregate supply due to higher growth, which allows it to avoid a massive increase in price levels following oil price shocks.
    Citation
    Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Abadi, Majid Mohammadi Hossein; Farboudmanesh, Rosa. 2015. The Response of Macro Variables of Emerging and Developed Oil Importers to Oil Price Movements. © Asian Development Bank Institute. http://hdl.handle.net/11540/9647.
    Keywords
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic
    Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Oil and Gas Industry
    Development cooperation
    Petroleum Industry
    Transport Industry
    Social condition
    Economic dependence
    Economic assistance
    International monetary relations
    International monetary relations
    International trade
    National accounting
    Market
    Petroleum Refineries
    Petroleum Products
    Petroleum Prices
    Petroleum
    Crude Oil
    Petrochemical Industry
    Export Oriented Industries
    Exchange
    Exchange rates
    Comparative economics
    Index number
    Monetary policy
    Value analysis
    Adjustment cost
    Transaction cost
    Conditionality
    International relations
    Oil refineries
    Gasoline
    Oil
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    Citable URI
    http://hdl.handle.net/11540/9647
    Metadata
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    Author
    Taghizadeh-Hesary, Farhad
    Yoshino, Naoyuki
    Abadi, Majid Mohammadi Hossein
    Farboudmanesh, Rosa
    Theme
    Economics
    Industry
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise