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Macroeconomic Effects of Oil Price Fluctuations in Colombia

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  • Leonardo Quero-Virla

Abstract

This research aims to study the effects of oil price changes on the Colombian economy during 2001:Q1 to 2016:Q2. A structural vector auto-regression model in the spirit of Blanchard and Galí (2010) is estimated under a recursive identification scheme, where unexpected oil price variations are exogenous relative to the contemporaneous values of the remaining variables. Drawing on impulse-response estimates, a 10% increase in the oil price generates the following accumulated orthogonalized responses: i) a contemporaneous 0.4% increase in GDP growth, later on the effect reaches its maximum in the first quarter (1.7% increase) and starts to decay after two quarters; ii) a contemporaneous 1.2% decrease in unemployment, then the effect remains slightly negative and reaches its maximum after ten quarters (5.1% decrease); iii) a contemporaneous 0.9% decrease in inflation, followed by an 0.2% increase by quarter three, and thereafter the effect remains slightly negative.

Suggested Citation

  • Leonardo Quero-Virla, 2016. "Macroeconomic Effects of Oil Price Fluctuations in Colombia," Revista Ecos de Economía, Universidad EAFIT, vol. 20(43), pages 23-38, December.
    • Handle: RePEc:col:000442:015651
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    File URL: http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4181
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    References listed on IDEAS

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    More about this item

    Keywords

    SVAR; impulse-response; oil market; Colombia;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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