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Oil and iron ore price shocks: What are the different economic effects in Australia?
Citation
Hoang, NT and Nguyen, BH, Oil and iron ore price shocks: What are the different economic effects in Australia?, The Economic Record, 49, (305) pp. 1-18. ISSN 0013-0249 (2018) [Refereed Article]
Copyright Statement
Copyright 2018 Economic Society of Australia
DOI: doi:10.1111/1475-4932.12398
Abstract
This paper compares the macroeconomic effects of global oil and iron ore price shocks on the Australian economy. Using a Bayesian structural vector autoregression model with sign restrictions, we identify three types of shock: supply, demand and specific demand. The main results suggest that, over the period from 1990Q1 to 2014Q4, the oil shock had a relative larger impact than the iron ore shock on output and inflation, while the iron ore shock was the dominant source of interest and exchange rate movements. The effects crucially depend on the underlying sources of oil or iron ore price shifts. As Australia is a small open economy, oil and iron ore prices should be treated as exogenous factors. Real GDP responds negatively to a rise in oil prices driven by supply disruptions, but positively to a similar shock on the iron ore market. Higher global demand for these commodities has a positive impact on the economy, but the iron ore demand shock is about twice larger. However, a positive oil and iron ore price shock driven by specific demand lead to a temporary decline in real GDP.
Item Details
Item Type: | Refereed Article |
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Keywords: | energy, China, time-series |
Research Division: | Economics |
Research Group: | Applied economics |
Research Field: | Macroeconomics (incl. monetary and fiscal theory) |
Objective Division: | Economic Framework |
Objective Group: | Macroeconomics |
Objective Field: | Macroeconomics not elsewhere classified |
UTAS Author: | Nguyen, BH (Dr Bao Nguyen) |
ID Code: | 141221 |
Year Published: | 2018 |
Web of Science® Times Cited: | 8 |
Deposited By: | Economics and Finance |
Deposited On: | 2020-10-05 |
Last Modified: | 2020-11-24 |
Downloads: | 0 |
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