1

Oil Shocks in a Global Perspective:

Are they Really that Bad?


Tobias N. Rasmussen and Agustn Roitman












WP/11/194

2011 International Monetary Fund WP/11/194
IMF Working Paper
Middle East and Central Asia Department
Oil Shocks in a Global Perspective: Are they Really that Bad?
Prepared by Tobias N. Rasmussen and Agustn Roitman
1

Authorized for distribution by Paul Cashin
August 2011


Abstract
Using a comprehensive global dataset, we outline stylized facts characterizing relationships
between crude oil prices and macroeconomic developments across the world. Approaching
the data from several angles, we find that the impact of higher oil prices on oil-importing
economies is generally small: a 25 percent increase in oil prices typically causes GDP to fall
by about half of one percent or less. While cross-country differences in impact are found to
depend mainly on the relative size of oil imports, we also show that oil price shocks are not
always costly for oil-importing countries: although higher oil prices increase the import bill,
there are partly offsetting increases in external receipts. We provide a small open economy
model illustrating the main transmission channels of oil shocks, and show how the recycling
of petrodollars may mitigate the impact.
JEL Classification Numbers: F00, F30, F41
Keywords: Oil prices; Oil importing economies; Oil shock episodes; Emerging and developing
countries; Recycling of petrodollars
Authors E-Mail Addresses: TRasmussen@imf.org; ARoitman@imf.org

1
The authors would like to thank seminar participants in the Middle East and Central Asia Departments Discussion
Forum for helpful comments and suggestions.
This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily
represent those of the IMF or IMF policy. Working Papers describe research in progress by the
author(s) and are published to elicit comments and to further debate.
2

Contents Page
I. Introduction ............................................................................................................................3
II. Data Overview .......................................................................................................................5
III. The Big Picture ....................................................................................................................6
IV. Anatomy of Oil Shocks .......................................................................................................8
V. Dynamic Panel Estimation ..................................................................................................10
VI. Modeling The Macroeconomic Effects of Oil Price Shocks .............................................12
A. Consumers Problem ...............................................................................................12
B. Equilibrium Conditions ...........................................................................................13
C. Perfect Foresight Equilibrium .................................................................................13
D. Oil Shock.................................................................................................................14
E. Competitiveness ......................................................................................................14
F. Lessons Learned ......................................................................................................15
VII. Conclusion ........................................................................................................................15
References ................................................................................................................................17
Data Appendix .........................................................................................................................19

Tables
1. Summary Statistics, 19702010 Averages ............................................................................5
2. Correlation between Oil Prices and Macroeconomic Aggregates .......................................20
3. Economic Developments during Oil Shocks, 19702010 ...................................................21
4. Economic Developments in Year after Oil Shocks, 19702010 .........................................22
5. Dynamic Panel Regressions: Main Results .........................................................................23

Figures
1. Correlation between the Cyclical Component of Real GDP and the Cyclical Component
of Real Oil Prices..24
2. Correlation between the Cyclical Component of Real Imports and the Cyclical Component
of Real Oil Prices .....................................................................................................................25
3. Correlation between the Cyclical Component of Real Exports and the Cyclical Component
of Real Oil Prices .....................................................................................................................26
4. Real GDP Growth in Oil Shock Episodes Less Median Growth ........................................27
5. Share of Oil Shock Episodes with Above-Median Growth Rate of Real GDP ...................28
6. Real GDP Growth in Year after Oil Shock Less Median Growth .......................................29

3
I. INTRODUCTION
The manner in which oil prices affect emerging and developing economies has received
surprisingly little attention, given the large body of literature on their effects in advanced
economies. The aim of this paper is to help fill the gap in coverage by outlining stylized facts
that characterize the relationship between oil prices and macroeconomic aggregates across the
world. The results show that cross-country differences in this relationship can in large part be
attributed to differences in the relative size of oil imports. At the same time, the negative impact
of oil price shocks on oil-importing countries is partly offset by concurrent increases in exports
and other income flows. These flows arise from high commodity prices being associated with
good times for the world economy as well as from the recycling of petrodollars by oil-exporting
economies. Both factors highlight the importance of viewing the impact of oil price
developments from a global perspective.

The notion that oil prices can have a macroeconomic impact is generally well accepted and the
debate has centered mainly on the magnitude and the channels of the effect. In a series of
contributions, Hamilton (1983, 1996, 2005, 2009) has presented empirical evidence suggesting
that oil price shocks have been one of the main causes of recessions in the United States. Others,
including Barsky and Kilian (2004), argue that the effect is small and that oil shocks alone
cannot explain the U.S. stagflation of the 1970s. Taking a more intermediate position, Bernanke
et al. (1997) argue that an important part of the effect of oil price shocks on the U.S. economy
results not from the change in oil prices per se, but from the resulting tightening of monetary
policy. In the same line of research, Blanchard and Gali (2007) present evidence showing that
the dynamic effect of oil shocks has decreased considerably over time, owing to a combination
of improvements in monetary policy, more flexible labor markets, and a smaller share of oil in
production. Their results indicate that a 10 percent increase in the price of oil would, prior to
1984, have reduced U.S. GDP by about 0.7 percent over a 23 year period, while after 1984 the
loss would be only about 0.25 percent.

In contrast to the extensive literature on the impact of oil prices on the U.S. economy, there has
been much less work on other countries and very little of that on developing economies. Outside
the U.S., studies of the relationship between oil prices and the macroeconomy have almost
exclusively been confined to other OECD members, with results suggesting that they tend to be
affected in broadly the same way as the U.S. but less strongly.
2
We are only aware of a few
papers analyzing the impact of oil price shocks on non-OECD countries, of which only three
cover oil-importing countries while the others look at individual oil exporters. One of these three
papers is by Berument et al. (2010), who apply structural VAR techniques to a number of

2
For example, Jimnez-Rodriguez and Snches (2004) find that a 100 percent increase in oil prices reduces GDP by
between 1 and 5 percent in G-7 countries and the Eurozone, with the U.S. at the upper end of that range and no
significant impact found for Japan. For Norway they find that the impact is positive at between 1 and 2 percent.
Results from several other studies are reported in a survey by Jones et al. (2004).
4
countries in the Middle East and North Africa. They find that oil price increases have a positive
impact on output in most of the regions oil-exporting economies, but, depending on whether the
shock is due to demand or supply, either a positive or negative impact on the regions oil
importers. Another paper is by Kilian et al. (2007) who also use a structural VAR but focus on
the impact of oil price shocks on external balances and take a more global perspective. They find
that the overall effect on the current account depends critically on the response of the non-oil
trade balance, with oil-importing economies tending to experience an improvement in this
balance and the opposite being the case for oil-exporting countries. Lastly, Mohaddes and Raissi
(2011) provide evidence indicating that the price of oil, through its impact on external income
and in turn on capital accumulation, has a positive impact on real output in Jordan.

In this paper, we provide a broad global perspective on the interaction between oil prices on the
one side and, on the other, both economic output and international trade. We start by looking at
correlations between the cyclical component of oil prices and the cyclical components of GDP,
imports, and exports. The results show that these correlations have, across the world, usually
been positive and increasing over the last forty years. This indicates that periods with high oil
prices have generally coincided with good times for the world economy, especially in recent
years. It also highlights the importance of disentangling the positive effect of oil prices
increasing as a result of growing demand from more adverse effects resulting from spikes in oil
prices due to reductions in supply as happened in the 1970s.

To analyze the impact of large oil price shocks on economic activity, we focus on the
12 episodes since 1970 in which oil prices have reached three-year highs. Even here we find no
evidence of a widespread contemporaneous negative effect on economic output across oil-
importing countries, but rather value and volume increases in both imports and exports. It is only
in the year after the shock that we find a negative impact on output for a small majority of
countries. These findings suggest that the higher import demand in oil-exporting economies
resulting from oil price increases has an important and immediate offsetting effect on economic
activity in the rest of the world, and that the adverse consequences are mostly relatively mild and
occurring with a lag. We complement this analysis with dynamic panel regressions showing that
the lagged negative impact of oil price increases on GDP in oil importing economies is
statistically significant and depends on the size of oil imports relative to GDP. The results
indicate that, after controlling for global economic conditions, a 25 percent increase in oil prices
(roughly equal to the median price increase in our 12 oil shock episodes) causes the typical oil
importer (where net oil imports have averaged between 3 and 4 percent of GDP) to experience a
cumulative loss of output of around 0.3 percent of GDP over a 23 year period. For oil importers
with oil imports greater than 5 percent of GDP the output loss increases to about 1 percent.

From these results we conclude that, across the world, the negative impact of oil price increases
depends to a large extent on, first, how dependent countries are on oil imports, and, second, how
strong are their links to oil exporters and the rest of the world. In this respect, the U.S. appears to
be an outlier in that we, consistent with findings in the literature, see that its economy has been
relatively hard hit by oil price shocks despite net oil imports averaging a relatively low
5
1.2 percent of GDP over the sample period (albeit increasing from 0.3 percent in 1970 to
2.3 percent in 2010). Across all oil-importing countries, we find that the high-income OECD
economies, where the ratio of oil imports to GDP has averaged about 2 percent, are less sensitive
to oil shocks than are other oil importers, where the ratio of oil imports to GDP has averaged
about 4 percent.

We proceed as follows: Section II provides an overview of the data that we employ. Section III
presents the big picture, stylized facts about co-movement of oil prices and other macroeconomic
aggregates across the world over the last 40 years. Section IV documents stylized facts on
economic developments during and after oil shock episodes. Section V presents results from
dynamic panel regressions. Section VI presents a simple model consistent with the facts, and
section VII concludes.
II. DATA OVERVIEW
To assess how the relationship between oil prices and macroeconomic aggregates varies across
countries we apply an extensive dataset of annual data spanning from 19702010. Aside from
global oil prices, our interest is primarily in just a few variables: GDP, and imports and exports
of goods and services. This narrow focus allows us to cover a large majority of countries. Our
data are all sourced from the IMFs World Economic Outlook database, and after dropping those
missing complete series for GDP we are left with 144 countries (see Data Appendix). We divide
these into four groups: oil exporters, and oil-importing OECD, middle-income, and low-income
countries.
3




Table 1 shows summary statistics for the four groups. From these data, the oil-exporting
countries stand out by virtue of their large positive ratio of net oil exports to GDP. Among the oil

3
We identify oil-exporting countries as those where the average share of net oil exports in total exports is at least 20
percent over 19702010. Among the other countries, we first identify OECD countries based on the membership in
1980, with Norway dropping out as the only oil exporter. We then divide the remaining countries based on average
annual per capita income at purchasing power parity, with a cutoff level of $4000. In the following, we use the terms
non-oil exporting and oil-importing interchangeably to ease the exposition, although some of the countries classified
as oil-importing also export oil.
GDP per
capita (US$)
Net oil exports
(% of GDP)
Annual real
GDP growth
(%)
Standard
deviation of
GDP per
capita growth
(%)
Exports/GDP
(%)
Imports/GDP
(%)
Oil Exporters 10758 26.3 4.8 8.9 51 42
Oil-importing OECD 18296 -2.0 2.7 3.8 37 36
Oil-importing Middle-income 9044 -4.2 4.2 6.1 51 57
Oil-importing Low-income 1525 -3.8 3.6 5.4 27 40
Sources: IMF, World Economic Outlook database; and authors' calculations.
Table 1. Summary Statistics, 1970-2010 Averages
6
importers, in contrast, this ratio is negative, with non-OECD countries being about twice as oil-
dependent as the OECD members. Non-OECD countries also are characterized by higher ratios
of exports and imports to GDP than OECD countries. These data indicate that, on the whole,
non-OECD countries, and oil exporters in particular, have greater exposure to oil-price
determined movements in the terms of trade and also greater variation in output.

III. THE BIG PICTURE
In analyzing the impact of changes in oil prices, it is important to recognize that commodity
prices can be influenced by global conditions. For example, oil prices can be high because of
strong global aggregate demand or high because of low oil supply. Macroeconomic outcomes
can be expected to vary accordingly. If oil prices are high due to demand, they are in any given
country likely to be associated with above-trend levels of output and trade, while the opposite is
likely to hold if the reason for high oil prices is low oil supply. The extent to which oil prices are
associated with negative outcomes is therefore an empirical question.



We analyze the co-movements of oil prices with our core macro variables by looking at
correlations of the cyclical component of real series.
4
The results are summarized in Table 2 and
the following regularities emerge:

Stylized fact #1: Oil prices and GDP tend to move in the same direction. In each of the four
groups, correlations are positive on average. This reflects that for a majority of countries, periods

4
To construct the series used in this section we first deflate U.S. dollar values with the U.S. CPI to create indices set
to 100 in year 2000. We then apply the HP filter, using = 100 and including the April 2011 World Economic
Outlook projections to 2015 to enhance the robustness of the 2010 end-point estimates.
20
0
20
40
60
-100
-50
0
50
100
150
200
250
300
1
9
7
0
1
9
7
4
1
9
7
8
1
9
8
2
1
9
8
6
1
9
9
0
1
9
9
4
1
9
9
8
2
0
0
2
2
0
0
6
2
0
1
0
Crude oil price
deflated by US CPI
Cyclical component
of oil prices
Cyclical component
of world GDP
Cyclical components of real World GDP and oil prices
(source series indexed 2000 = 100)
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
Oil exporters
Oil-importing OECD
Oil-importing middle income
Oil-importing low income
Correlation between cyclical components of
real GDP and of oil prices
(Group average of correlations over 15-year rolling windows)
7
of above-trend oil prices have generally coincided with above-trend output. Moreover, with
correlations in all cases substantially higher in the second half of the sample than in the first half,
this positive association has increased over time. Among individual countries, oil exporters
clearly exhibit the highest correlations. Still, it is striking that the correlations are also positive
for a large majority of oil importers. Indeed, the U.S. and Japan stand out as being the only
OECD countries displaying a negative correlation over 19702010 (Figure 1).
5


Stylized fact #2: Oil prices and imports tend to move in the same direction. Correlations for
all three groups of oil importers are substantially higher than those between oil prices and GDP.
Only a handful of countries display a negative correlation (Figure 2).

Stylized fact #3: Oil prices and exports tend to move in the same direction. The correlations
are strongest among oil exporters where they for all variables are the highest among all the
country groups. For oil importers, in contrast, the correlations are somewhat smaller than for
imports. Nevertheless, for all groups and sub-periods, the correlations are higher than for GDP,
and negative for less than 1 in 10 countries (Figure 3).
6


From these three stylized facts we conclude that oil prices tend to be positively associated with
economic activity and also that the degree of co-movement has strengthened over time.
7
The
relationship is strongest for oil exporters, as one would expect, but is also clearly present among
the majority of OECD countries andsomewhat less stronglyin oil-importing developing
economies. This suggests that, especially in the second half of our sample period, variation in oil
prices has been driven more by variation in demand than by variation in supply. Accordingly, oil
price increases during the past two decades appear to a large extent a reflection of good times for
the global economy.

While these results suggest that oil prices on the whole should not be a major cause for concern
in so far as they follow the pattern of recent history, they do not rule out the possibility that
particularly large oil price increases can have more adverse consequences. Indeed, there is strong
evidence of a non-linear relationship between oil prices and economic outcomes, where large

5
To account for possible lagged effects, we also calculated correlations of GDP with oil prices a year earlier instead
of contemporaneously. In this specification, the correlations are positive for all oil exporters. The oil-importing
countries, in contrast, show no clear pattern, with the group evenly split between those displaying a positive and
those displaying a negative correlation. The U.S. still stands out, however, this time with the most negative
correlation among all 144 countries.
6
Available data on foreign direct investment and remittances inflows are not as comprehensive as for imports and
exports, but they show a broadly similar pattern of positive correlations.
7
Given that the presence of a trend in oil prices is debatable, we also calculated correlations without the cyclical
adjustment of oil prices. This did not materially change the results.
8
upward price increases have a disproportionately negative impact.
8
In the next two sections we
therefore examine how our four groups of countries fared during oil price spikes.

IV. ANATOMY OF OIL SHOCKS
The natural starting point to assess how damaging oil price shocks have been in different
countries and groups of countries is to consider what actually happened during such episodes. In
what has become a standard approach, we follow Hamilton (2003) in identifying oil price shocks
as years when oil prices reach a three-year high. This approach identifies 12 shocks during our
19702010 sample, a period in which the median increase in oil prices was 27 percent.
Following Kaminsky et al. (2004), we study the behavior of macroeconomic aggregates during
these episodes by comparing the median annual change in a particular variable in the year of the
event to the median annual change over the entire sample period. This tells us if the observed
changes during these episodes were large or small in a given country. We perform these
calculations for all countries and for variables expressed in both nominal and real terms and as a
ratio to GDP, and we report the median values for each group in Table 3.
9
We identify the
following patterns:

Stylized fact #4: Oil price shocks are generally associated with contemporaneous increases
in imports. In each of the three groups of oil importers a large majority of countries experienced
above-median changes in imports, whether defined as the nominal or real growth rate or as the
change in the ratio to GDP. The largest increases are in nominal import growth, as could be
expected given the higher oil prices. Changes in the growth rate of real imports and in the ratio
of imports to GDP are smaller but still sizeable at around 1 percent or more in each of the three
groups of oil importers. Compared to the oil importers, the oil exporters exhibit a significantly
larger increase, 4.4 percent, in import volumes. In contrast to the oil importers, however, the oil
exporters exhibit a decline in the ratio of imports to GDP, reflecting their high growth of nominal
GDP in these episodes at 9.6 percent above the median rate.

Stylized fact #5: Oil price shocks are generally associated with contemporaneous increases
in exports. Oil exporters exhibit a large increase in the growth rate of nominal exports of almost
25 percent, reflecting the large price increases, but a small decline in the volume growth rate.
More surprising is the consistent pattern of increasing exports among the oil importers: they
show increases in the growth of export volumes ranging between 0.7 percent for the middle-
income countries and 1.3 percent in the low-income group and, in all cases, increases in the ratio

8
See Hamilton (2005) and references therein.
9
For real series we distinguish between two concepts. One is where U.S. dollar values are deflated by U.S. CPI, as
in the previous section. The other is the conventional measure where nominal series are deflated by their respective
deflators. The former is useful to gauge changes in international purchasing power. The latter concept, which we
hereafter refer to as volume, measures the quantities involved. In the years with oil price shocks, as shown in Table
2, the former measure consistently increased by more than the latter, implying that the various price deflators all
increased by more than U.S. CPI.
9
to GDP of close to 1 percent. In all three groups of oil importers, and by each of the four
measures, exports increase in a sizeable majority of countries.

Stylized fact #6: Oil price shocks are generally associated with contemporaneous increases
in GDP. The results dispel any notion of oil shocks always having an immediate and widespread
negative impact on output. On the contrary: these episodes have generally been associated with
GDP growth increasing in the same year, with the median volume increase ranging from 0.2
percentage points for oil-importing OECD countries to 1.5 percentage points for the oil
exporters. This positive impact is seen in a majority of cases, with the share of episodes with
above-median GDP volume growth ranging from 58 percent for oil-importing OECD countries
to 63 percent for middle-income oil importers. Within the groups, the impact varies across
countries (Figures 4 and 5), but it is notable that the U.S. is very much at the low end of the
distribution. Indeed, median U.S. GDP volume growth during the oil shock episodes was 0.4
percent lower than median growth over the entire sample period and above the median in only 5
of the 12 episodes. On both counts, these are the lowest figures among all the OECD countries,
possibly reflecting relatively low fuel taxes and higher energy intensity in the U.S.
10

From these results, we conclude that oil shock episodes have typically been associated with
widespread contemporaneous increases in international trade and, surprisingly, in economic
output as well. The increases in trade likely reflect that the oil exporters higher export earnings
during periods with large oil price increases are partially recycled as higher imports from the rest
of the world. With petrodollars also creating activity in other countries via the flow of
remittances and investments, these offsetting effects help explain the lack of a negative GDP
impact.
11
Surprising as it is, it is important to stress that these are only the contemporaneous
effects in the year of the oil price shock. Indeed, results in the literature suggest that the negative
impact on output for advanced economies only really materializes after four quarters (see, e.g.,
Hamilton, 2005, and Jimnez-Rodriguez, 2004).

To evaluate lagged effects, Table 4 considers what happens to imports, exports, and GDP in the
year after the oil shocks. The results indicate that some negative effects tend to occur with a lag.
One year after an oil shock, OECD oil-importers rate of GDP volume growth typically fell by
0.7 percent compared to the median (1.8 percent in the U.S.) and only a third of these countries

10
Even in 1974 and 1979, when oil prices increased by some 220 and 110 percentthe two largest such increases in
our sample periodsame-year GDP growth increased relative to the median for all four of our groups. In the year
after the shock, however, the negative impact was more pronounced, with growth declining (although still positive
for all but the OECD) for all groups of oil importers in both years except middle-income countries in 1980. In 1975,
GDP volume growth fell by 3 percentage points for the group of OECD countries and 1.3 percentage points for the
other two groups of oil importers. In 1980, the declines were less than 1 percentage point for all groups.
11
Available data on remittances and foreign direct investment are not as comprehensive as those for imports and
exports. While the results are consequently more tentative, applying the methods in this section to these data
indicates that the growth rate of oil importing countries receipts from remittances and foreign direct investment
typically increased during oil shock episodes in much the same way as for exports. On average, however, these
flows are smaller than those of exports and the macroeconomic effects are therefore likely to be smaller too.
10
experienced an increase (Figure 6 and Table 4). The impact on other oil-importing countries has
been less pronounced, however, perhaps reflecting a greater share of primary goods in their
exports and a positive correlation between the price of oil and prices of other commodities, and
the oil exporters posted an increase in the growth rate of GDP volume. Export volume growth
was more consistently negative, declining by between around 0.5 percent for middle-income oil
importers and 1.5 percent for oil-importing OECD countries. Imports show a more mixed
picture, with volume growth increasing further for all groups, except OECD oil importers.

V. DYNAMIC PANEL ESTIMATION
In this section we adapt the basic autoregressive model of Hamilton (2003, 2005) based on
quarterly data for the U.S. to annual data and extend it to analyze multiple countries and at the
same time also control for global conditions. Our dynamic panel model takes the following form:
y
,t
= o
0
+o
I
y
,t-I
p
I=1
+bx
t
+c
I
op
t-I
n
I=0
+e
,t
,

where y
i,t
is output in country i at time t, x
t
is an indicator of global economic conditions, and op
t

reflects the extent of an oil price shock.

Table 5 reports results from our preferred specification of this model. We measure home country
output as the same cyclical component of GDP volume used in the previous section. To control
for global economic conditions, we use world GDP volume (again measured as the cyclical
component) as well as the level of oil prices (deflated by U.S. CPI), reflecting the association
established in Section III. For the measure of oil price shocks, op
t
, we use the percentage change
in the price of oil in the years where it reaches a three-year high, with this variable otherwise
taking a value of zero. We find that the coefficients on lagged home-country output are typically
strongly significant with up to three lags and with broadly similar magnitudes across different
country groups. The coefficient on world GDP volume is positive and strongly significant for all
countries and more so than that on the oil price level, with the magnitudes indicating that oil-
exporting and oil-importing middle-income economies are more influenced by global conditions
than oil-importing OECD and, in particular, low-income countries.
12


Our main interest, however, is in the coefficients on the oil price shock variable, which capture
the average effect of an oil shock on the domestic economy. The results show that even when
controlling for global economic conditions and thus abstracting from the generally positive
association between oil prices and global demand, the contemporaneous oil shock coefficient is
statistically insignificant for the world as a whole and also separately for each of the four groups

12
Given the possibility that the regression results are unduly influenced by countries where output could influence
world GDP or oil prices, we tried excluding from the regression the U.S. and Saudi Arabiathe two prime
candidates for such causality. This has an almost imperceptibly small impact on the results.
11
of countries that we have used so far. Nevertheless, if we instead sort oil importers by their
average ratio of oil imports to GDP, we find that the effect becomes larger and more significant
as the ratio of oil imports to GDP increases. For countries with an average ratio of oil imports to
GDP of 4 percent or more, the results indicate that a 25 percent increase in oil prices will reduce
real GDP that year by 0.3 percent (-1.170/4).

In line with the findings in the previous section, the results in Table 5 also point to the presence
of lagged effects. Indeed, by controlling for global economic conditions, the regressions make
these effects more clearly visible, especially for oil exporters and oil-importing middle-income
economies. At lag 1, the coefficient on the oil price shock is negative and statistically significant
at 10 percent for all the country groups under consideration except for oil exporters, indicating
that oil shocks do have important lagged effects on output in oil-importing countries. And, again,
the coefficient becomes more negative the higher the ratio of oil imports to GDP. At lag 2, by
contrast, the coefficient is strongly positive for the oil exporters and somewhat less so for the
group of non-oil exporting OECD countries.

To trace out the full impact of an oil shock, taking into account the fact that higher oil prices are
generally positively associated with good global conditions as well as the dynamic effects, we
calculate impulse responses for a 25 percent increase in oil prices as implied by the coefficients
in Table 5. The results indicate that the typical oil importer can expect a cumulative GDP loss of
about 0.3 percent over the first two years with little subsequent impact. For countries with oil
imports of more than 4 percent of GDP (i.e., at or above the average for middle- and low-income
oil importers), however, the loss increases to about 0.8 percentand this loss increases further
for those with oil imports above 5 percent of GDP. In contrast to the oil importers, oil exporters
show little impact on GDP in the first two years but then a substantial increase consistent with
the positive income effect, with real GDP 0.6 percent higher in year t+3.



To put these numbers in perspective, it is useful to think of an economy where oil accounts for
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
A
l
l
e
c
o
n
o
m
i
e
s
o
i
l
e
x
p
o
r
t
e
r
s
o
i
l
i
m
p
o
r
t
e
r
s
O
E
C
D
M
i
d
d
l
e
-
i
n
c
o
m
e
L
o
w
-
i
n
c
o
m
e
g
r
e
a
t
e
r
t
h
a
n

3
p
e
r
c
e
n
t
g
r
e
a
t
e
r
t
h
a
n

4
p
e
r
c
e
n
t
g
r
e
a
t
e
r
t
h
a
n

5
p
e
r
c
e
n
t
Non-oil exporters
by income level
Non-oil exporters
by average oil
import to GDP ratio
Not
significant at
10 percent
Lag 2
Lag 1
Lag 0
Significant at
10 percent
Lag 2
Lag 1
Lag 0
Coefficient on oil shock variable from panel regression
-1.5
-1.0
-0.5
0.0
0.5
Year t Year t+1 Year t+2 Year t+3 Year t+4
Impulse response of oil shock
(Cumulative impact of 25% increase in oil price on real GDP, in %)
Oil exporters
Oil importers
oil importers with average ratio of oil
imports to GDP greater than 3 percent
greater than 4 percent
greater than 5 percent
12
4 percent of total expenditure and where aggregate spending is determined entirely by demand. If
the quantity of oil consumption remains unchanged, then a 25 percent increase in the price of oil
will cause spending on other items, and hence real GDP, to contract by 1 percent of the total.
From this reference point, one would expect the possibility of substituting away from oil to
reduce the overall impact on GDP. At the same time, there could also be factors working in the
opposite direction, via, for example, confidence effects, market frictions, or changes in monetary
policy. With our estimates of the GDP loss at only about half the level implied by the direct price
effect on the import bill, the results presented here suggest the size of any such magnifying
effects, if present, is not substantial across countries.

VI. MODELING THE MACROECONOMIC EFFECTS OF OIL PRICE SHOCKS

We now develop a simple model of the macroeconomic effects of oil price shocks. Our focus is
on explaining the response of a small open economy to oil price shocks according to the strength
of links to the rest of the world. The model has three non-storable goods: exportables,
importables, and non-tradables; we select the exportable good as the numeraire. There is a given
and constant endowment path of exportables and non-tradables. In contrast, the economy
consumes, but is not endowed with importables.

A. Consumers Problem
Consumers lifetime utility is given by

] u(c
t
I
, c
t
N
)c
-[t

0
Jt, (1)

where is the subjective discount rate, and c
t
I
and c
t
N
denote consumption of importables and
non-tradable goods. We correspondingly denote the price of importables and non-tradeables by
p
t
I
and p
t
N
, with the ratio p
N
/p
I
being the real exchange rate and p
t
I
being the inverse of the terms
of trade.

The flow constraint is given by

b

t
= rb
t
+y
L
+p
t
N
y
N
+
t
-p
t
I
c
t
I
-p
t
N
c
t
N
, (2)

where b denotes the stock of net foreign assets, y
L
and y
N
are the endowments of exportable and
non-tradable goods, and is non-interest income from the rest of the world. We assume

t
= o(p
t
I
), wbcrc '(p
t
I
) > u

where this income flow can be interpreted as exports or other forms of external receipts arising
from the recycling of oil revenue, with the magnitude depending on the degree of economic
integration, . By substitution and forward integration we get

13
b

t
= rb
t
+y
L
+p
t
N
y
N
+o(p
t
I
) -p
t
I
c
t
I
-p
t
N
c
t
N
(3)

b
0
+] |y
L
+p
t
N
y
N
+o(p
t
I
)]c
-t

0
Jt = ] (p
t
I
c
t
I
+p
t
N
c
t
N
)c
-t

0
Jt (4)

Formally, the economys problem consists in maximizing (1) subject to (4), and the first-order
conditions are given by

u
c
I(c
t
I
, c
t
N
) = zp
t
I
(5)

u
c
N(c
t
I
, c
t
N
) = zp
t
N
(6)

Combining these two,

p
t
N
p
t
I
=
u
c
N
(c
t
I
,c
t
N
)
u
c
I
(c
t
I
,c
t
N
)
(7)

B. Equilibrium Conditions

The non-tradable goods market must clear.

c
t
N
= y
N
(8)

Imposing condition (8) on (4) yields the economys resource constraint.

b
0
+] |y
L
+o(p
t
I
)]c
-t

0
Jt = ] p
t
I
c
t
I
c
-t

0
Jt (9)

C. Perfect Foresight Equilibrium

The perfect foresight equilibrium path (PFEP) for this economy, along which p
t
I
is constant, is
characterized by consumption of importables, consumption of non-tradables, and the real
exchange rate. From (5) is is clear that consumption of importables will be constant along a
PFEP. Then, using the resource constraint (9), the level of consumption of importables is given
by

c
I
=
b
0
+
E
+u](p
I
)
p
I
(10)

Consumption of non-tradables, along a PFEP, will be equal to the endowment.

c
N
= y
N
(11)

The real exchange rate is obtained by substituting (10) and (11) in (7).
14

p
N
p
I
=
u
c
N
(c
I
,
N
)
u
c
I
(c
I
,
N
)
(12)

D. Oil Shock

Suppose that there is an unanticipated permanent increase in the price of oil, i.e. the importable
goods. This implies deterioration in the terms of trade. Since the shock is unanticipated,
consumers re-optimize at the moment of the shock. Along the new perfect foresight equilibrium,
p
I
will still be constant and from (10) we get that c
I
can increase or decrease, depending on
whether the negative terms of trade effect that results from the loss of purchasing power is
smaller or greater than the positive recycling effect resulting from the positive correlation
between income flows and the price of oil.

Jc
I
Jp
I
= -
rb
0
+y
L
+o(p
I
)
p
I
2
_____________
tcms o] tudc c]]cct
+
o'(p
I
)
p
I
_____
cccIng c]]cct
_ u

In practice, which effect is larger is an open empirical question. Notice that in this simple model,
the parameter is capturing the degree of integration to the rest of the world and/or the oil
exporters.
E. Competitiveness
What is the effect of an oil price shock on the real exchange rate? To answer this question, we
totally differentiate (13) and obtain

J(
p
N
p
I
)
Jp
I
=
Jc
I
Jp
I
_
u
c
Iu
c
I
c
N -u
c
Nu
c
I
c
I
u
c
I
2
_ _ u

Notice that for normal goods, the term in brackets is positive (see Vegh, forthcoming). This
result implies that an adverse oil price shock (an increase in p
I
) can lead to an increase
(appreciation) or decrease (depreciation) in the real exchange rate p
N
/p
I
. Again, the effect will
depend on the relative strength of the terms of trade effect vis--vis the recycling effect.

Intuitively, a deterioration in the terms of trade (e.g., from an increase in the price of oil) can
make the consumer wealthier or poorer depending on the strength of the recycling effect. If the
consumer is poorer, then, at pre-shock relative prices, he would like to consume less of both
importables and non-tradable goods. Since non-tradables are in fixed supply, this implies that at
pre-shock relative prices there is excess supply of non-tradable goods, which will further
decrease the real exchange rate. The opposite happens if the consumer is wealthier after the
shock. In other words, if a decline in the terms of trade does not lead to a loss of income, the real
exchange rate may not depreciate.
15
F. Lessons Learned
The main lesson to be drawn from this model is that negative terms of trade shocks can be
associated with positive and offsetting effects that help mitigate the direct impact on the
domestic economy. The intuition is simple: a loss in the terms of trade is a gain to someone else
and, depending on the degree of interlinkages, some of that gain will be shared. The net wealth
effect is in principle ambiguous; it depends on the relative strength of the negative and positive
effects.
VII. CONCLUSION
Conventional wisdom has it that oil shocks are bad for oil-importing countries. This is grounded
in the experience of slumps in many advanced economies during the 1970s. It is also consistent
with the large body of research on the impact of higher oil prices on the U.S. economy, although
the magnitude and channels of the effect are still being debated. In this paper, we offer a global
perspective on the macroeconomic impact of oil prices. In doing so, we are filling a void of
research on the effects of oil prices on developing economies.

Our findings indicate that oil prices tend to be surprisingly closely associated with good times for
the global economy. Indeed, we find that the United States has been somewhat of an outlier in
the way that it has been negatively affected by oil price increases. Across the world, oil price
shock episodes have generally not been associated with a contemporaneous decline in output but,
rather, with increases in both imports and exports. There is evidence of lagged negative effects
on output, particularly for OECD economies, but the magnitude has typically been small.

Controlling for global economic conditions, and thus abstracting from our finding that oil price
increases generally appear to be demand-driven, makes the impact of higher oil prices stand out
more clearly. For a given level of world GDP, we do find that oil prices have a negative effect on
oil-importing countries and also that cross-country differences in the magnitude of the impact
depend to a large extent on the relative magnitude of oil imports. The effect is still not
particularly large, however, with our estimates suggesting that a 25 percent increase in oil prices
will cause a loss of real GDP in oil-importing countries of less than half of one percent, spread
over 23 years. One likely explanation for this relatively modest impact is that part of the greater
revenue accruing to oil exporters will be recycled in the form of imports or other international
flows, thus contributing to keep up demand in oil-importing economies. We provide a model
illustrating this effect and find supporting empirical evidence.

The finding that the negative impact of higher oil prices has generally been quite small does not
mean that the effect can be ignored. Some countries have clearly been negatively affected by high
oil prices. Moreover, our results do not rule out more adverse effects from a future shock that is
driven largely by lower oil supply than the more demand-driven increases in oil prices that have
been the norm in the last two decades. In terms of policy lessons, our findings suggest that efforts
16
to reduce dependence on oil could help reduce the exposure to oil price shocks and hence costs
associated with macroeconomic volatility.
13
At the same time, given a certain level of oil imports,
developing economic linkages to oil exporters could also work as a natural shock absorber.

13
See Ramey and Ramey (1995).
17
REFERENCES
Barsky, Robert B. & Lutz Kilian, 2004, "Oil and the Macroeconomy since the 1970s," Journal of
Economic Perspectives, American Economic Association, vol. 18(4), pages 11534.
Bernanke, Ben S. & Gertler, Mark & Watson, Mark W, 1997, "Systematic Monetary Policy and
the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, vol. 28(1),
pages 91157.
Berument, Hakan M., Nildag B. Ceylan & Nukhet Doan, 2010, "The Impact of Oil Price
Shocks on the Economic Growth of Selected MENA Countries," The Energy Journal,
vol. 31(1), pages 14976.
Blanchard, Olivier J. & Jordi Gal, 2007, "The Macroeconomic Effects of Oil Price Shocks: Why
are the 2000s so different from the 1970s?," NBER Working Paper No. 13368, National
Bureau of Economic Research.
Hamilton, James D., 1983, "Oil and the Macroeconomy Since World War II," Journal of
Political Economy, University of Chicago Press, vol. 91(2), pages 22848.
Hamilton, James D., 1996, "This is What Happened to the Oil Price-Macroeconomy
Relationship," Journal of Monetary Economics, vol. 38(2), pages 21520.
Hamilton, James D., 2003, "What is an Oil Shock?" Journal of Econometrics, vol. 113(2), pages
363-98.
Hamilton, James D., 2005, "Oil and the Macroeconomy" in The New Palgrave Dictionary of
Economics, ed. by S. Durlauf and L. Blume, (London: MacMillan, 2006, 2nd ed).
Hamilton, James D., 2009, "The Causes and Consequences of the Oil Shock of 200708," NBER
Working Paper No. 15002, National Bureau of Economic Research.
Jimnez-Rodrguez, Rebecca & Marcelo Sanchez, 2004, "Oil Price Shocks and Real GDP
Growth: Empirical Evidence for Some OECD Countries, " ECB Working Paper No. 362.
Kaminsky, Graciela L., Carmen M. Reinhart & Carlos A. Vegh, 2004, "When it Rains, it Pours:
Procyclical Capital Flows and Macroeconomic Policies," NBER Working Paper
No.10780, National Bureau of Economic Research.
Kilian, Lutz, Alessandro Rebucci & Nikola Spatafora, 2007, "Oil Shocks and External
Balances," IMF Working Paper No. 07/110, International Monetary Fund.
Mohaddes, Kamiar & Mehdi Raissi, 2011, Oil Prices, External Income, and Growth: Lessons
from Jordan, forthcoming IMF Working Paper.
18
Ramey, Garey, &Valerie A. Ramey, 1995, "Cross-Country Evidence on the Link Between
Volatility and Growth," The American Economic Review, 85(5), 1138151.
Vegh, Carlos A., Open Economy Macroeconomics in Developing Countries, forthcoming, MIT
Press.
19
DATA APPENDIX
Oil-exporting countries (19) Algeria, Angola, Cameroon, Congo, Ecuador, Equatorial Guinea,
Gabon, Indonesia, Iran, Kuwait, Nigeria, Norway, Oman, Qatar,
Saudi Arabia, Syria, Trinidad, UAE, Venezuela.

Oil-importing countries (125)

OECD based on membership
in 1980 (23)
Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg,
Netherlands, New Zealand, Portugal, Spain, Sweden, Switzerland,
Turkey, UK, USA.

Middle-income countries
(36)
Antigua, Argentina, Bahamas, Bahrain, Barbados, Botswana, Brazil,
Bulgaria, Chile, Colombia, Costa Rica, Cyprus, Dominica, Grenada,
Hong Kong, Hungary, Israel, Jamaica, Korea, Lebanon, Malaysia,
Mauritius, Mexico, Panama, Peru, Poland, Romania, Seychelles,
Singapore, South Africa, St. Kitts, St. Lucia, St. Vincent, Suriname,
Taiwan, Uruguay

Low-income countries
(66)

Albania, Bangladesh, Belize, Benin, Bhutan, Bolivia, Burkina,
Burundi, Cape Verde, CAR, CDR, Chad, China, Comoros, Cte
dIvore, DR, Egypt, El Salvador, Ethiopia, Fiji, Gambia, Ghana,
Guatemala, Guinea, Guyana, Haiti, Honduras, India, Jordan, Kenya,
Kiribati, Lao, Lesotho, Madagascar, Malawi, Maldives, Mali,
Mauritania, Mongolia, Morocco, Mozambique, Myanmar, Nepal,
Nicaragua, Niger, Pakistan, Paraguay, Philippines, PNG, Rwanda,
Samoa, Sao Tome, Senegal, Sierra Leone, Solomon Islands, Sri
Lanka, Sudan, Swaziland, Tanzania, Thailand, Togo, Tunisia,
Uganda, Vanuatu, Vietnam.

Data series usedall from the April 2011 vintage of the World Economic outlook databaseare:

Oil Prices W001POILAPSP Crude Oil (petroleum), simple average of three spot
prices; Dated Brent, West Texas Intermediate, and the
Dubai Fateh, US$ per barrel
U.S. CPI W111PCPI Consumer price index, period average
Imports WBM Imports of goods and services
Import deflator WTM_D Price deflator for imports goods & services
Oil imports WTMGO Value of oil imports
Exports WBX Exports of goods and services
Export deflator WTX_D Price deflator for exports goods & services
Oil exports WTXGO Value of oil exports
GDP per capita WPPPPC PPP per capita
World nominal GDP W001NGDPD Gross domestic product, current prices, U.S. dollars
World real GDP W001NGDP_R Gross domestic product, constant prices
Nominal GDP WNGDPD Gross domestic product, current prices, U.S. dollars
Real GDP WNGDP_R Gross domestic product, constant prices
GDP per capita WPPPGDP PPP valuation of country GDP, U.S. dollars


20




1970-2010 1970-90 1991-2010
Oil exporters 0.48 0.36 0.70
Oil-importing OECD 0.26 0.11 0.49
Oil-importing Middle Income 0.24 0.17 0.36
Oil-importing Low Income 0.18 0.14 0.28
1970-2010 1970-90 1991-2010
Oil exporters 0.39 0.30 0.59
Oil-importing OECD 0.47 0.30 0.75
Oil-importing Middle Income 0.42 0.38 0.64
Oil-importing Low Income 0.38 0.33 0.50
1970-2010 1970-90 1991-2010
Oil exporters 0.65 0.62 0.84
Oil-importing OECD 0.42 0.24 0.69
Oil-importing Middle Income 0.32 0.24 0.56
Oil-importing Low Income 0.29 0.28 0.38
Table 2. Correlation between Oil Prices and Macroeconomic Aggregates
Correlation between the cyclical component of real GDP and the cyclical
component of real oil prices
Correlation between the cyclical component of real exports and the
cyclical component of real oil prices
Correlation between the cyclical component of real imports and the
cyclical component of real oil prices
Sources: IMF, World Economic Outlook database; and authors' calculations.
Note: Real variables constructed by deflating U.S. dollar values with U.S. CPI.
21


(12 shocks, median outcomes by country group)
Non-oil exporters
Oil
exporters
OECD
Middle-
income
Low-
income
(episode value less median value, in percent)
Imports
Nominal annual growth rate 10.5 9.2 7.7 9.4
Real annual growth rate
Nominal in US$ deflated by US CPI 7.7 6.2 7.6 7.6
Volume 4.5 1.3 3.3 1.1
Ratio to GDP annual change -0.8 1.1 1.3 0.7
Exports
Nominal annual growth rate 24.6 7.7 4.2 7.6
Real annual growth rate
Nominal in US$ deflated by US CPI 21.6 5.8 3.2 7.4
Volume -0.2 1.0 0.5 2.1
Ratio to GDP annual change 2.7 0.8 1.2 0.7
GDP
Nominal annual growth rate 11.7 5.7 2.6 5.8
Real annual growth rate
Nominal in US$ deflated by US CPI 9.3 2.3 2.1 2.5
Volume 1.4 0.3 1.0 1.1
(share of episodes with value greater than median value, in percent)
Imports
Nominal annual growth rate 83 83 92 83
Real annual growth rate
Nominal in US$ deflated by US CPI 75 83 75 83
Volume 75 75 100 58
Ratio to GDP annual change 33 92 100 92
Exports
Nominal annual growth rate 100 75 75 83
Real annual growth rate
Nominal in US$ deflated by US CPI 100 67 75 75
Volume 50 67 75 67
Ratio to GDP annual change 83 92 67 83
GDP
Nominal annual growth rate 100 67 83 83
Real annual growth rate
Nominal in US$ deflated by US CPI 100 58 75 67
Volume 92 67 75 75
Table 3. Economic Developments during Oil Shocks, 1970-2010
Sources: IMF, World Economic Outlook database; and authors' calculations.
Note: Oil price shocks identified as years when the nominal U.S. dollar price of crude oil reaches
a 3-year high. There have been 12 such years since 1970: 1973, 74, 79, 80, 90, 96, 2000, 04, 05,
06, 07, 08, during which real oil prices increased by an average of 46 percent. Volumes are
computed as nominal variables deflated by the corresponding deflator (exports and imports
deflator for exports and imports and GDP deflator for GDP).
22

(12 shocks, median outcomes by country group)
Non-oil exporters
Oil
exporters
OECD
Middle-
income
Low-
income
(episode value less median value, in percent)
Imports
Nominal annual growth rate 8.5 -1.8 3.5 5.3
Real annual growth rate
Nominal in US$ deflated by US CPI 5.8 -2.8 3.0 0.3
Volume 6.9 -3.6 2.2 -0.1
Ratio to GDP annual change 1.0 0.7 1.2 0.1
Exports
Nominal annual growth rate -0.8 -2.4 -1.0 1.0
Real annual growth rate
Nominal in US$ deflated by US CPI 0.3 -4.9 -1.4 -1.9
Volume -4.1 -2.1 -2.4 -0.6
Ratio to GDP annual change -0.6 0.7 0.0 -0.1
GDP
Nominal annual growth rate 6.9 -2.3 0.8 2.7
Real annual growth rate
Nominal in US$ deflated by US CPI 7.6 -2.6 -0.3 -0.7
Volume 1.1 -0.8 -0.1 0.2
(share of episodes with value greater than median value, in percent)
Imports
Nominal annual growth rate 67 50 58 58
Real annual growth rate
Nominal in US$ deflated by US CPI 67 50 58 50
Volume 83 42 67 50
Ratio to GDP annual change 67 67 58 50
Exports
Nominal annual growth rate 50 42 50 50
Real annual growth rate
Nominal in US$ deflated by US CPI 50 33 42 42
Volume 17 33 42 50
Ratio to GDP annual change 42 67 42 50
GDP
Nominal annual growth rate 58 42 67 58
Real annual growth rate
Nominal in US$ deflated by US CPI 58 33 50 50
Volume 67 33 50 50
Table 4. Economic Developments in Year after Oil Shocks, 1970-2010
Sources: IMF, World Economic Outlook database; and authors' calculations.
Note: Oil price shocks identified as years when the nominal U.S. dollar price of crude oil reaches
a 3-year high. There have been 12 such years since 1970: 1973, 74, 79, 80, 90, 96, 2000, 04, 05,
06, 07, 08, during which real oil prices increased by an average of 46 percent. Volumes are
computed as nominal variables deflated by the corresponding deflator (exports and imports
deflator for exports and imports and GDP deflator for GDP).



2
3






Table 5. Dynamic Panel Regressions: Main Results
(Dependent variable: Real GDP)
Oil importers
Average oil import to GDP ratio (in percent)
All
countries
Oil
exporters All OECD
Middle-
income
Low-
income
greater
than 3
percent
greater
than 4
percent
greater
than 5
percent
Constant -0.218 * -0.877 * -0.109 -0.216 * -0.302 0.012 -0.210 -0.237 -0.215
(0.112) (0.477) (0.106) (0.118) (0.231) (0.150) (0.146) (0.209) (0.290)
Dependent variable lagged
Lag 1 0.746 *** 0.774 *** 0.731 *** 0.636 *** 0.694 *** 0.754 *** 0.727 *** 0.734 *** 0.686 ***
(0.014) (0.038) (0.015) (0.034) (0.027) (0.020) (0.019) (0.023) (0.030)
Lag 2 -0.243 *** -0.313 *** -0.208 *** -0.127 *** -0.264 *** -0.155 *** -0.230 *** -0.245 *** -0.244 ***
(0.017) (0.047) (0.019) (0.048) (0.033) (0.026) (0.024) (0.029) (0.037)
Lag 3 -0.066 *** 0.029 -0.108 *** -0.162 *** -0.102 *** -0.120 *** -0.095 *** -0.091 *** -0.102 ***
(0.014) (0.040) (0.015) (0.040) (0.027) (0.021) (0.019) (0.024) (0.030)
World real GDP 0.580 *** 0.781 *** 0.546 *** 0.685 *** 0.702 *** 0.422 *** 0.564 *** 0.590 *** 0.625 ***
(0.039) (0.166) (0.038) (0.045) (0.082) (0.053) (0.052) (0.074) (0.102)
Oil price 0.209 ** 0.620 * 0.144 * 0.201 ** 0.410 ** -0.005 0.277 ** 0.362 ** 0.400 *
(0.086) (0.366) (0.082) (0.091) (0.177) (0.115) (0.112) (0.160) (0.222)
Oil price shock
Lag 0 -0.359 -0.570 -0.358 0.275 -0.724 -0.389 -0.631 * -1.170 ** -1.740 **
(0.263) (1.119) (0.249) (0.267) (0.542) (0.352) (0.343) (0.490) (0.681)
Lag 1 -0.409 *** -0.305 -0.433 *** -0.306 ** -0.745 *** -0.274 * -0.517 *** -0.710 *** -0.850 ***
(0.120) (0.511) (0.114) (0.124) (0.249) (0.162) (0.157) (0.224) (0.312)
Lag 2 0.229 * 1.420 *** 0.045 0.310 ** -0.383 0.187 -0.131 -0.254 -0.259
(0.121) (0.513) (0.115) (0.124) (0.250) (0.162) (0.158) (0.226) (0.314)
Cross-sections 144 19 125 23 36 66 75 48 29
Total observations 5184 684 828 828 1296 2376 2700 1728 1044
R-squared 0.46 0.44 0.47 0.65 0.47 0.47 0.46 0.46 0.43
Sources: IMF, World Economic Outlook database; and authors' calculations.
Note: Unbalanced panel of annual data 1970-2010. Real GDP measured as cyclical component of series indexed to 100 in year 2000. Oil price is average price of
crude def lated by U.S. CPI and indexed to 1 in year 2000. Oil price shock is the annual change in oil prices in years where oil prices reach a three-year high,
expressed as a f raction. Figures show coef f icients, with standard errors in parenthesis and "***", "**", and "*" indicating signif icance at, respectively, the 1, 5, and 10
percent level.



2
4





E
g
y
p
t



N
i
c
a
r
a
g
u
a

M
o
n
g
o
l
i
a


U
S
A
H
o
n
d
u
r
a
s


B
u
l
g
a
r
i
a


M
y
a
n
m
a
r



R
o
m
a
n
i
a
R
w
a
n
d
a



J
a
p
a
n



S
u
r
i
n
a
m
e
J
a
m
a
i
c
a



J
o
r
d
a
n
M
o
z
a
m
b
i
q
u
e
K
i
r
i
b
a
t
i


B
a
h
a
m
a
s
S
y
r
i
a
T
a
n
z
a
n
i
a


C
A
R
D
o
m
i
n
i
c
a


S
u
d
a
n
S
a
o

T
o
m
e
E
t
h
i
o
p
i
a


S
r
i

L
a
n
k
a
H
a
i
t
i



L
e
b
a
n
o
n



C
h
i
n
a
P
a
n
a
m
a



A
l
b
a
n
i
a
B
h
u
t
a
n



M
a
l
d
i
v
e
s


V
i
e
t
n
a
m
G
u
i
n
e
a



G
u
y
a
n
a



U
g
a
n
d
a



P
e
r
u
C
a
p
e

V
e
r
d
e
S
t
.

L
u
c
i
a

S
t
.

V
i
n
c
e
n
t
G
r
e
n
a
d
a



K
e
n
y
a



M
a
l
a
w
i



C
o
s
t
a

R
i
c
a
N
e
p
a
l
L
a
o
S
w
i
t
z
e
r
l
a
n
d
C
a
m
e
r
o
o
n


S
a
m
o
a
B
o
l
i
v
i
a



T
o
g
o



A
n
t
i
g
u
a
C
D
R
B
a
n
g
l
a
d
e
s
h
B
r
a
z
i
l
D
e
n
m
a
r
k



N
e
w

Z
e
a
l
a
n
d
B
e
n
i
n



S
e
n
e
g
a
l
C
o
t
e

D
i
v
o
r
e
F
i
n
l
a
n
d
B
a
r
b
a
d
o
s


C
o
m
o
r
o
s



S
t
.

K
i
t
t
s

C
h
a
d



I
r
a
n
M
a
l
i



G
e
r
m
a
n
y
H
o
n
g

K
o
n
g
P
o
l
a
n
d



N
e
t
h
e
r
l
a
n
d
P
N
G
B
e
l
g
i
u
m
S
w
e
d
e
n
I
t
a
l
y
A
u
s
t
r
i
a
F
r
a
n
c
e
I
n
d
i
a
D
R
C
a
n
a
d
a



S
e
y
c
h
e
l
l
e
s
B
u
r
u
n
d
i



I
n
d
o
n
e
s
i
a

T
a
i
w
a
n
M
o
r
o
c
c
o



I
c
e
l
a
n
d



C
o
l
o
m
b
i
a
G
h
a
n
a



I
s
r
a
e
l



B
u
r
k
i
n
a
K
o
r
e
a
P
o
r
t
u
g
a
l
M
a
u
r
i
t
a
n
i
a
T
h
a
i
l
a
n
d
M
a
u
r
i
t
i
u
s
A
u
s
t
r
a
l
i
a

L
e
s
o
t
h
o



C
y
p
r
u
s



V
e
n
e
z
u
e
l
a
B
o
t
s
w
a
n
a


B
e
l
i
z
e



I
r
e
l
a
n
d
E
l

S
a
l
v
a
d
o
r
L
u
x
e
m
b
o
u
r
g
N
i
g
e
r



S
i
n
g
a
p
o
r
e

S
p
a
i
n
H
u
n
g
a
r
y



G
r
e
e
c
e
A
l
g
e
r
i
a



T
u
n
i
s
i
a
U
K
T
u
r
k
e
y
A
n
g
o
l
a



U
r
u
g
u
a
y
P
a
r
a
g
u
a
y


A
r
g
e
n
t
i
n
a
P
a
k
i
s
t
a
n
G
u
a
t
e
m
a
l
a

S
i
e
r
r
a

L
e
o
n
e
S
o
l
o
m
o
n

I
s
N
o
r
w
a
y
S
o
u
t
h

A
f
r
i
c
a
F
i
j
i



E
q
u
a
t
o
r
i
a
l

G
V
a
n
u
a
t
u



C
h
i
l
e
S
w
a
z
i
l
a
n
d

P
h
i
l
i
p
p
i
n
e
s
G
a
b
o
n



M
a
d
a
g
a
s
c
a
r
M
a
l
a
y
s
i
a


G
a
m
b
i
a
Q
a
t
a
r
C
o
n
g
o
M
e
x
i
c
o
E
c
u
a
d
o
r
Z
a
m
b
i
a
B
a
h
r
a
i
n
O
m
a
n



U
A
E
T
r
i
n
i
d
a
d
K
u
w
a
i
t
N
i
g
e
r
i
a



S
a
u
d
i

A
r
a
b
i
a
-0.4
-0.2
0
0.2
0.4
0.6
0.8
Figure 1. Correlation between the Cyclical Component of Real GDP and the Cyclical Component of Real Oil Prices
(1970 2010)
Note: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. The cyclical components have been estimated using the
Hodrick-Prescott filter. Real GDP is defined as nominal GDP deflated by the GDP deflator, and real oil prices as the nominal oil price (in US dollars)
deflated by the US CPI.
Sources: IMF, World Economic Outlook; and authors calculations.



2
5






C
h
a
d



M
o
n
g
o
l
i
a


R
o
m
a
n
i
a
I
r
a
n
U
g
a
n
d
a



E
q
u
a
t
o
r
i
a
l

G
B
a
h
a
m
a
s
H
a
i
t
i



G
a
b
o
n



N
e
p
a
l
R
w
a
n
d
a


P
a
n
a
m
a



E
t
h
i
o
p
i
a


T
o
g
o



C
D
R
S
t
.

V
i
n
c
e
n
t
C
h
i
n
a
G
u
i
n
e
a



B
a
n
g
l
a
d
e
s
h
C
o
t
e

D
i
v
o
r
e
K
i
r
i
b
a
t
i


A
n
t
i
g
u
a
C
o
m
o
r
o
s



C
o
n
g
o
N
i
c
a
r
a
g
u
a

P
o
l
a
n
d



D
e
n
m
a
r
k


V
e
n
e
z
u
e
l
a
S
a
m
o
a
B
h
u
t
a
n



B
e
l
i
z
e



L
a
o
B
o
l
i
v
i
a



L
u
x
e
m
b
o
u
r
g
G
u
y
a
n
a



T
a
n
z
a
n
i
a


G
r
e
n
a
d
a



V
i
e
t
n
a
m
B
o
t
s
w
a
n
a


E
l

S
a
l
v
a
d
o
r
M
y
a
n
m
a
r



P
e
r
u
N
o
r
w
a
y
B
u
r
k
i
n
a
I
c
e
l
a
n
d



B
e
n
i
n



P
o
r
t
u
g
a
l
A
n
g
o
l
a



A
u
s
t
r
i
a
B
u
l
g
a
r
i
a


P
N
G
G
h
a
n
a



A
l
b
a
n
i
a
P
a
r
a
g
u
a
y


N
i
g
e
r



S
t
.

K
i
t
t
s

L
e
b
a
n
o
n



S
w
i
t
z
e
r
l
a
n
d
Q
a
t
a
r
N
e
w

Z
e
a
l
a
n
d
M
a
l
a
w
i



U
S
A
S
t
.

L
u
c
i
a

H
o
n
g

K
o
n
g
O
m
a
n



H
u
n
g
a
r
y



C
a
n
a
d
a



Z
a
m
b
i
a
K
u
w
a
i
t
G
u
a
t
e
m
a
l
a

V
a
n
u
a
t
u



M
a
l
i



M
a
u
r
i
t
a
n
i
a
S
a
o

T
o
m
e
C
a
p
e

V
e
r
d
e
K
e
n
y
a



A
l
g
e
r
i
a



D
R
M
a
u
r
i
t
i
u
s
C
o
l
o
m
b
i
a
T
u
r
k
e
y
T
a
i
w
a
n
S
e
n
e
g
a
l
I
r
e
l
a
n
d
S
o
u
t
h

A
f
r
i
c
a
M
o
z
a
m
b
i
q
u
e
D
o
m
i
n
i
c
a


S
o
l
o
m
o
n

I
s
S
e
y
c
h
e
l
l
e
s
P
h
i
l
i
p
p
i
n
e
s
U
A
E
B
u
r
u
n
d
i



L
e
s
o
t
h
o



U
K
I
s
r
a
e
l



I
n
d
i
a
M
o
r
o
c
c
o


C
y
p
r
u
s



E
c
u
a
d
o
r
C
o
s
t
a

R
i
c
a
B
r
a
z
i
l
S
u
r
i
n
a
m
e
E
g
y
p
t



A
u
s
t
r
a
l
i
a

J
a
m
a
i
c
a



S
p
a
i
n
N
i
g
e
r
i
a



S
u
d
a
n
T
h
a
i
l
a
n
d
C
A
R
B
a
r
b
a
d
o
s


M
a
l
a
y
s
i
a


I
n
d
o
n
e
s
i
a

S
i
e
r
r
a

L
e
o
n
e
K
o
r
e
a
A
r
g
e
n
t
i
n
a
C
a
m
e
r
o
o
n


B
e
l
g
i
u
m
S
w
e
d
e
n
H
o
n
d
u
r
a
s


G
e
r
m
a
n
y
S
a
u
d
i

A
r
a
b
i
a
F
i
n
l
a
n
d
S
w
a
z
i
l
a
n
d

P
a
k
i
s
t
a
n
S
i
n
g
a
p
o
r
e

M
e
x
i
c
o
F
r
a
n
c
e
N
e
t
h
e
r
l
a
n
d
M
a
l
d
i
v
e
s


I
t
a
l
y
G
a
m
b
i
a
U
r
u
g
u
a
y
T
r
i
n
i
d
a
d
C
h
i
l
e
M
a
d
a
g
a
s
c
a
r
S
y
r
i
a
J
a
p
a
n



J
o
r
d
a
n
F
i
j
i


S
r
i

L
a
n
k
a
T
u
n
i
s
i
a
B
a
h
r
a
i
n
-0.3
-0.1
0.1
0.3
0.5
0.7
Figure 2. Correlation between the Cyclical Component of Real Imports and the Cyclical Component of Real Oil Prices
(1970 2010)
Note: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. The cyclical components have been estimated using the
Hodrick-Prescott filter. Real GDP is defined as nominal GDP deflated by the GDP deflator, and real oil prices as the nominal oil price (in US dollars)
deflated by the US CPI.
Sources: IMF, World Economic Outlook; and authors calculations.



2
6






D
o
m
i
n
i
c
a


B
u
r
u
n
d
i



S
t
.

V
i
n
c
e
n
t
B
a
h
a
m
a
s
R
o
m
a
n
i
a
G
r
e
n
a
d
a



H
a
i
t
i



N
i
c
a
r
a
g
u
a

E
t
h
i
o
p
i
a


C
A
R
T
a
n
z
a
n
i
a


G
h
a
n
a



S
t
.

L
u
c
i
a

K
i
r
i
b
a
t
i


B
a
n
g
l
a
d
e
s
h
B
u
r
k
i
n
a
N
e
p
a
l
S
a
o

T
o
m
e
A
n
t
i
g
u
a
P
a
n
a
m
a



E
l

S
a
l
v
a
d
o
r
D
R
R
w
a
n
d
a



C
o
s
t
a

R
i
c
a
S
e
n
e
g
a
l
C
D
R
U
g
a
n
d
a



S
w
a
z
i
l
a
n
d

C
o
m
o
r
o
s


S
t
.

K
i
t
t
s

M
a
l
a
w
i



P
o
r
t
u
g
a
l
I
r
a
n
G
u
y
a
n
a



S
a
m
o
a
B
e
n
i
n



P
o
l
a
n
d



M
a
u
r
i
t
i
u
s
V
i
e
t
n
a
m
L
a
o
M
a
l
i



D
e
n
m
a
r
k


B
o
t
s
w
a
n
a


T
a
i
w
a
n
G
a
m
b
i
a
I
c
e
l
a
n
d



V
a
n
u
a
t
u



H
o
n
d
u
r
a
s


B
e
l
i
z
e



N
e
w

Z
e
a
l
a
n
d
K
e
n
y
a



S
w
i
t
z
e
r
l
a
n
d
L
e
b
a
n
o
n



M
a
d
a
g
a
s
c
a
r
P
h
i
l
i
p
p
i
n
e
s
L
e
s
o
t
h
o



I
r
e
l
a
n
d
M
y
a
n
m
a
r



S
r
i

L
a
n
k
a
H
o
n
g

K
o
n
g
C
h
a
d



K
o
r
e
a
M
a
l
d
i
v
e
s


P
a
r
a
g
u
a
y


M
a
u
r
i
t
a
n
i
a
S
i
e
r
r
a

L
e
o
n
e
S
e
y
c
h
e
l
l
e
s
J
a
p
a
n



T
u
r
k
e
y
G
u
a
t
e
m
a
l
a

Z
a
m
b
i
a
A
u
s
t
r
i
a
C
h
i
n
a
B
h
u
t
a
n



C
o
l
o
m
b
i
a
A
l
b
a
n
i
a
P
a
k
i
s
t
a
n
T
o
g
o



C
a
n
a
d
a



C
a
p
e

V
e
r
d
e
S
o
l
o
m
o
n

I
s
P
N
G
I
n
d
i
a
B
u
l
g
a
r
i
a


C
y
p
r
u
s


J
a
m
a
i
c
a



I
s
r
a
e
l



G
e
r
m
a
n
y
S
u
d
a
n
U
r
u
g
u
a
y
M
e
x
i
c
o
S
w
e
d
e
n
H
u
n
g
a
r
y



S
i
n
g
a
p
o
r
e

S
p
a
i
n
N
i
g
e
r


A
u
s
t
r
a
l
i
a

F
r
a
n
c
e
B
e
l
g
i
u
m
E
q
u
a
t
o
r
i
a
l

G
I
t
a
l
y
F
i
n
l
a
n
d
T
h
a
i
l
a
n
d
A
n
g
o
l
a



C
o
n
g
o
C
h
i
l
e
A
r
g
e
n
t
i
n
a
G
u
i
n
e
a



J
o
r
d
a
n
B
r
a
z
i
l
C
a
m
e
r
o
o
n


B
a
r
b
a
d
o
s


M
o
r
o
c
c
o



M
a
l
a
y
s
i
a


M
o
z
a
m
b
i
q
u
e
Q
a
t
a
r
U
K
N
e
t
h
e
r
l
a
n
d
S
u
r
i
n
a
m
e
U
S
A
F
i
j
i



E
g
y
p
t


S
o
u
t
h

A
f
r
i
c
a
B
o
l
i
v
i
a



P
e
r
u
O
m
a
n



I
n
d
o
n
e
s
i
a

S
y
r
i
a
N
o
r
w
a
y
E
c
u
a
d
o
r
G
a
b
o
n



T
r
i
n
i
d
a
d
T
u
n
i
s
i
a
U
A
E
K
u
w
a
i
t
B
a
h
r
a
i
n
N
i
g
e
r
i
a



S
a
u
d
i

A
r
a
b
i
a
A
l
g
e
r
i
a



V
e
n
e
z
u
e
l
a
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0 Figure 3. Correlation between the Cyclical Component of Real Exports and the Cyclical Component of Real Oil Prices
(1970 2010)
Note: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. The cyclical components have been estimated using the
Hodrick-Prescott filter. Real GDP is defined as nominal GDP deflated by the GDP deflator, and real oil prices as the nominal oil price (in US dollars)
deflated by the US CPI.
Sources: IMF, World Economic Outlook; and authors calculations.



2
7





B
o
t
s
w
a
n
a


C
h
a
d




L
e
b
a
n
o
n



K
o
r
e
a
S
t
.

L
u
c
i
a

K
u
w
a
i
t
A
l
g
e
r
i
a



C
y
p
r
u
s



C
h
i
l
e
C
o
t
e

D
i
v
o
r
e
G
a
b
o
n



C
o
m
o
r
o
s



T
o
g
o



C
a
m
e
r
o
o
n


T
h
a
i
l
a
n
d
T
a
i
w
a
n
S
w
a
z
i
l
a
n
d

G
u
i
n
e
a



U
S
A
M
a
l
d
i
v
e
s


S
y
r
i
a
B
h
u
t
a
n



C
o
s
t
a

R
i
c
a
B
u
r
u
n
d
i



P
o
r
t
u
g
a
l
G
r
e
e
c
e
N
e
p
a
l
J
a
p
a
n



G
e
r
m
a
n
y
C
a
n
a
d
a



S
u
r
i
n
a
m
e
B
e
l
i
z
e



A
u
s
t
r
a
l
i
a

J
a
m
a
i
c
a



G
u
a
t
e
m
a
l
a

S
e
n
e
g
a
l
U
K
E
g
y
p
t



E
l

S
a
l
v
a
d
o
r
G
u
y
a
n
a



V
i
e
t
n
a
m
O
m
a
n



S
t
.

V
i
n
c
e
n
t
C
A
R
I
t
a
l
y
M
o
r
o
c
c
o



C
a
p
e

V
e
r
d
e
L
e
s
o
t
h
o



F
r
a
n
c
e
I
n
d
o
n
e
s
i
a

M
a
u
r
i
t
i
u
s
H
u
n
g
a
r
y



P
N
G
M
o
z
a
m
b
i
q
u
e
F
i
j
i



S
t
.

K
i
t
t
s

D
e
n
m
a
r
k



T
u
n
i
s
i
a
S
i
n
g
a
p
o
r
e

N
e
w

Z
e
a
l
a
n
d
N
o
r
w
a
y
B
a
r
b
a
d
o
s


B
o
l
i
v
i
a



L
a
o
S
p
a
i
n
P
o
l
a
n
d



D
o
m
i
n
i
c
a


B
u
r
k
i
n
a
B
e
n
i
n



G
a
m
b
i
a
I
n
d
i
a
N
i
g
e
r
i
a



C
h
i
n
a
P
h
i
l
i
p
p
i
n
e
s
G
r
e
n
a
d
a



C
o
l
o
m
b
i
a
L
u
x
e
m
b
o
u
r
g
T
u
r
k
e
y
G
h
a
n
a



B
e
l
g
i
u
m
N
e
t
h
e
r
l
a
n
d
M
a
l
a
y
s
i
a


S
r
i

L
a
n
k
a
K
e
n
y
a



E
c
u
a
d
o
r
P
a
k
i
s
t
a
n
I
s
r
a
e
l



S
w
e
d
e
n
I
r
e
l
a
n
d
R
o
m
a
n
i
a
H
o
n
g

K
o
n
g
S
w
i
t
z
e
r
l
a
n
d
M
a
l
i



A
n
t
i
g
u
a
H
o
n
d
u
r
a
s


M
e
x
i
c
o
S
u
d
a
n
P
a
r
a
g
u
a
y


U
g
a
n
d
a



M
a
l
a
w
i



K
i
r
i
b
a
t
i


N
i
c
a
r
a
g
u
a

B
a
n
g
l
a
d
e
s
h
D
R
F
i
n
l
a
n
d
B
r
a
z
i
l
I
r
a
n
A
u
s
t
r
i
a
M
y
a
n
m
a
r



B
a
h
a
m
a
s
M
a
u
r
i
t
a
n
i
a
S
o
u
t
h

A
f
r
i
c
a
S
o
l
o
m
o
n

I
s
N
i
g
e
r



B
u
l
g
a
r
i
a


S
a
u
d
i

A
r
a
b
i
a
J
o
r
d
a
n
I
c
e
l
a
n
d



B
a
h
r
a
i
n
T
a
n
z
a
n
i
a


R
w
a
n
d
a



H
a
i
t
i



M
o
n
g
o
l
i
a


S
a
m
o
a
A
r
g
e
n
t
i
n
a
S
i
e
r
r
a

L
e
o
n
e
U
r
u
g
u
a
y
V
a
n
u
a
t
u



E
q
u
a
t
o
r
i
a
l

G
S
e
y
c
h
e
l
l
e
s
C
o
n
g
o
M
a
d
a
g
a
s
c
a
r
P
e
r
u
P
a
n
a
m
a



A
l
b
a
n
i
a
U
A
E
V
e
n
e
z
u
e
l
a
T
r
i
n
i
d
a
d
Q
a
t
a
r
S
a
o

T
o
m
e
Z
a
m
b
i
a
C
D
R
E
t
h
i
o
p
i
a


A
n
g
o
l
a




-4
-2
0
2
4
6
Figure 4. Real GDP Growth in Oil Shock Episodes Less Median Growth
(1970 2010, in percent)
Notes: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. Real GDP is defined as nominal GDP (in local currency)
deflated by the GDP deflator.
Sources: IMF, World Economic Outlook; and authors' calculations.



2
8




C
h
a
d



T
a
i
w
a
n
A
l
g
e
r
i
a



G
u
i
n
e
a



C
o
t
e

D
i
v
o
r
e
U
S
A
U
K
C
a
n
a
d
a



J
a
p
a
n



A
u
s
t
r
a
l
i
a

C
h
i
l
e
B
e
l
i
z
e



C
y
p
r
u
s



L
e
b
a
n
o
n



S
y
r
i
a
B
h
u
t
a
n



K
o
r
e
a
T
h
a
i
l
a
n
d
B
o
t
s
w
a
n
a


C
a
m
e
r
o
o
n


G
a
b
o
n



S
e
n
e
g
a
l
S
w
a
z
i
l
a
n
d

T
o
g
o



G
e
r
m
a
n
y
I
t
a
l
y
G
r
e
e
c
e
P
o
r
t
u
g
a
l
C
o
s
t
a

R
i
c
a
E
l

S
a
l
v
a
d
o
r
G
u
a
t
e
m
a
l
a

G
u
y
a
n
a



J
a
m
a
i
c
a



S
t
.

K
i
t
t
s

S
t
.

L
u
c
i
a

S
t
.

V
i
n
c
e
n
t
S
u
r
i
n
a
m
e
J
o
r
d
a
n
K
u
w
a
i
t
O
m
a
n




E
g
y
p
t



M
a
l
d
i
v
e
s


N
e
p
a
l
V
i
e
t
n
a
m
B
u
r
u
n
d
i



C
a
p
e

V
e
r
d
e
C
o
m
o
r
o
s



M
a
u
r
i
t
i
u
s
M
o
r
o
c
c
o



F
i
j
i



P
N
G
H
u
n
g
a
r
y



D
e
n
m
a
r
k



N
e
t
h
e
r
l
a
n
d
N
o
r
w
a
y
T
u
r
k
e
y
N
e
w

Z
e
a
l
a
n
d
H
o
n
d
u
r
a
s


G
r
e
n
a
d
a



M
y
a
n
m
a
r



I
n
d
i
a
I
n
d
o
n
e
s
i
a

M
a
l
a
y
s
i
a


S
i
n
g
a
p
o
r
e

A
n
g
o
l
a



C
A
R
B
e
n
i
n



E
q
u
a
t
o
r
i
a
l

G
G
h
a
n
a



L
e
s
o
t
h
o



M
a
l
a
w
i



M
o
z
a
m
b
i
q
u
e
N
i
g
e
r




S
a
o

T
o
m
e
S
u
d
a
n
B
u
r
k
i
n
a
S
o
l
o
m
o
n

I
s
K
i
r
i
b
a
t
i


S
a
m
o
a
A
l
b
a
n
i
a
C
h
i
n
a
M
o
n
g
o
l
i
a


P
o
l
a
n
d



F
r
a
n
c
e
L
u
x
e
m
b
o
u
r
g
F
i
n
l
a
n
d
I
r
e
l
a
n
d
S
p
a
i
n
B
r
a
z
i
l
D
R
E
c
u
a
d
o
r
H
a
i
t
i



M
e
x
i
c
o
P
a
n
a
m
a



P
a
r
a
g
u
a
y


P
e
r
u
A
n
t
i
g
u
a
B
a
h
a
m
a
s
Q
a
t
a
r
B
a
n
g
l
a
d
e
s
h
H
o
n
g

K
o
n
g
P
a
k
i
s
t
a
n
C
D
R
G
a
m
b
i
a
K
e
n
y
a




M
a
l
i



N
i
g
e
r
i
a



R
w
a
n
d
a




S
e
y
c
h
e
l
l
e
s
T
a
n
z
a
n
i
a


T
u
n
i
s
i
a
U
g
a
n
d
a



R
o
m
a
n
i
a
A
u
s
t
r
i
a
B
e
l
g
i
u
m
S
w
e
d
e
n
A
r
g
e
n
t
i
n
a
B
o
l
i
v
i
a



C
o
l
o
m
b
i
a
N
i
c
a
r
a
g
u
a

U
r
u
g
u
a
y
V
e
n
e
z
u
e
l
a
B
a
r
b
a
d
o
s


D
o
m
i
n
i
c
a


T
r
i
n
i
d
a
d
I
r
a
n
S
a
u
d
i

A
r
a
b
i
a
U
A
E
S
r
i

L
a
n
k
a
L
a
o
C
o
n
g
o
E
t
h
i
o
p
i
a


M
a
d
a
g
a
s
c
a
r
M
a
u
r
i
t
a
n
i
a
S
i
e
r
r
a

L
e
o
n
e
Z
a
m
b
i
a
V
a
n
u
a
t
u



S
w
i
t
z
e
r
l
a
n
d
I
c
e
l
a
n
d



B
a
h
r
a
i
n
I
s
r
a
e
l



P
h
i
l
i
p
p
i
n
e
s
B
u
l
g
a
r
i
a


S
o
u
t
h

A
f
r
i
c
a
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Figure 5. Share of Oil Shock Episodes with Above-Median Growth Rate of Real GDP
(1970 2010)
Notes: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. Real GDP is defined as nominal GDP (in local currency)
deflated by the GDP deflator.
Sources: IMF, World Economic Outlook; and authors' calculations.



2
9




K
u
w
a
i
t
S
a
m
o
a
U
K
B
o
t
s
w
a
n
a


S
t
.

L
u
c
i
a

C
o
s
t
a

R
i
c
a
K
o
r
e
a
F
i
j
i



S
e
y
c
h
e
l
l
e
s
B
a
h
a
m
a
s
S
t
.

K
i
t
t
s

D
e
n
m
a
r
k



C
h
a
d



U
S
A
L
e
s
o
t
h
o



S
i
n
g
a
p
o
r
e

C
y
p
r
u
s



T
u
r
k
e
y
P
o
r
t
u
g
a
l
I
r
e
l
a
n
d
S
o
l
o
m
o
n

I
s
T
o
g
o



T
a
i
w
a
n
M
a
u
r
i
t
i
u
s
H
o
n
d
u
r
a
s


C
o
l
o
m
b
i
a
G
r
e
n
a
d
a



T
h
a
i
l
a
n
d
B
e
l
i
z
e



G
e
r
m
a
n
y
A
n
t
i
g
u
a
C
a
n
a
d
a



K
e
n
y
a



J
a
p
a
n



M
a
l
a
y
s
i
a


L
e
b
a
n
o
n



G
a
m
b
i
a
A
u
s
t
r
a
l
i
a

S
t
.

V
i
n
c
e
n
t
C
h
i
l
e
A
l
g
e
r
i
a



V
i
e
t
n
a
m
H
o
n
g

K
o
n
g
S
w
a
z
i
l
a
n
d

G
a
b
o
n



L
u
x
e
m
b
o
u
r
g
N
e
t
h
e
r
l
a
n
d
I
t
a
l
y
G
r
e
e
c
e
M
a
l
d
i
v
e
s


B
r
a
z
i
l
F
r
a
n
c
e
G
u
i
n
e
a



N
o
r
w
a
y
F
i
n
l
a
n
d
R
w
a
n
d
a



N
e
w

Z
e
a
l
a
n
d
I
n
d
o
n
e
s
i
a

G
u
a
t
e
m
a
l
a

B
e
l
g
i
u
m
C
a
m
e
r
o
o
n


S
p
a
i
n
S
a
u
d
i

A
r
a
b
i
a
S
w
i
t
z
e
r
l
a
n
d
M
a
u
r
i
t
a
n
i
a
A
u
s
t
r
i
a
I
r
a
n
T
u
n
i
s
i
a
C
h
i
n
a
I
s
r
a
e
l




K
i
r
i
b
a
t
i


S
y
r
i
a
J
a
m
a
i
c
a



E
q
u
a
t
o
r
i
a
l

G
A
n
g
o
l
a



S
e
n
e
g
a
l
U
g
a
n
d
a




S
w
e
d
e
n
M
o
z
a
m
b
i
q
u
e
P
o
l
a
n
d



B
u
r
u
n
d
i



P
h
i
l
i
p
p
i
n
e
s
B
a
r
b
a
d
o
s


B
h
u
t
a
n



E
g
y
p
t



D
o
m
i
n
i
c
a


P
N
G
I
c
e
l
a
n
d



B
a
h
r
a
i
n
D
R
C
o
t
e

D
i
v
o
r
e
H
u
n
g
a
r
y



M
y
a
n
m
a
r



M
o
r
o
c
c
o



C
A
R
C
o
m
o
r
o
s



B
e
n
i
n



N
i
c
a
r
a
g
u
a

U
A
E
M
e
x
i
c
o
S
r
i

L
a
n
k
a
E
l

S
a
l
v
a
d
o
r
C
a
p
e

V
e
r
d
e
P
a
k
i
s
t
a
n
T
r
i
n
i
d
a
d
B
o
l
i
v
i
a



N
i
g
e
r
i
a



M
a
l
i



E
c
u
a
d
o
r
L
a
o
M
a
d
a
g
a
s
c
a
r
I
n
d
i
a
Q
a
t
a
r
N
e
p
a
l
R
o
m
a
n
i
a
B
a
n
g
l
a
d
e
s
h
G
h
a
n
a



C
o
n
g
o
O
m
a
n



P
a
r
a
g
u
a
y


H
a
i
t
i



B
u
l
g
a
r
i
a


S
u
d
a
n
S
u
r
i
n
a
m
e
V
a
n
u
a
t
u



M
o
n
g
o
l
i
a


B
u
r
k
i
n
a
A
l
b
a
n
i
a
S
o
u
t
h

A
f
r
i
c
a
S
i
e
r
r
a

L
e
o
n
e
U
r
u
g
u
a
y
M
a
l
a
w
i



T
a
n
z
a
n
i
a


A
r
g
e
n
t
i
n
a
N
i
g
e
r



E
t
h
i
o
p
i
a


C
D
R
S
a
o

T
o
m
e
P
a
n
a
m
a



G
u
y
a
n
a



V
e
n
e
z
u
e
l
a
P
e
r
u
Z
a
m
b
i
a
J
o
r
d
a
n
-4.5
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
Figure 6. Real GDP Growth in Year after Oil Shock Less Median Growth
(1970 2010, in percent)
Notes: Red bars are oil-exporting countries and blue bars are non-oil exporting countries. Real GDP is defined as nominal GDP (in local currency)
deflated by the GDP deflator.
Sources: IMF, World Economic Outlook; and authors' calculations.