Oil shocks and external adjustment
We examine the effects of endogenously determined oil price fluctuations in a two-country DSGE model. Under incomplete financial markets, an oil market-specific shock that boosts the oil price results in a wealth transfer toward oil exporters, depresses the oil importer's consumption, and causes the oil importer's real exchange rate to depreciate. Although the oil importer experiences a deterioration in the oil component of its trade balance, an improvement in the nonoil balance substantially dampens the effects on the overall trade balance.
Year of publication: |
2011
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Authors: | Bodenstein, Martin ; Erceg, Christopher J. ; Guerrieri, Luca |
Published in: |
Journal of International Economics. - Elsevier, ISSN 0022-1996. - Vol. 83.2011, 2, p. 168-184
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Publisher: |
Elsevier |
Subject: | Oil shocks Trade DSGE models |
Saved in:
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