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Consequences of Oil and Food Price Shocks on the Ecuadorian Economy

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  • Jesser Roberto Paladines Amaiquema

    (Department of Economics, Faculty of Business Studies, Universidad T cnica de Machala, Ecuador)

  • Alexander Ruben Paladines Amaiquema

    (Department of Sociology, Faculty of Social Sciences, Universidad T cnica de Machala, Ecuador.)

Abstract

In this study, I investigated the short run impact on macroeconomics variables in Ecuador, economic growth and inflation specifically, due to world oil price and global food price shocks, considered these last two, as external variables. The model used to explain the dynamic of variables was the structural vector auto-regression, with annual data from 1980 to 2015. I concluded that oil price shocks affect positively to economic growth in Ecuador during two consecutive years, and then it returns to its natural state gradually. No enough statistically significant evidence was found, to conclude the global food index affect economic growth or inflation in Ecuador. Inflation neither showed significant response to oil price shocks. Considering the small sample in this study, due to unavailability of domestic economic data, the model resulted stable, and it is in line with arguments from other authors. Oil price shocks are a very important variable to keep watching, as Ecuador still depends on it, any government macroeconomic policy should be focus to it.

Suggested Citation

  • Jesser Roberto Paladines Amaiquema & Alexander Ruben Paladines Amaiquema, 2017. "Consequences of Oil and Food Price Shocks on the Ecuadorian Economy," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 146-151.
    • Handle: RePEc:eco:journ2:2017-03-18
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    References listed on IDEAS

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    Cited by:

    1. Ayhan KAPUSUZOGLU & Xi LIANG & Nildag Basak CEYLAN, 2018. "Macroeconomic impacts of global food price shocks on the economy of Turkey," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(11), pages 517-525.
    2. Mora Barrenechea, Mauricio, 2020. "Time-varying effects of commodities prices in the Bolivian economy," MPRA Paper 104706, University Library of Munich, Germany.

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    More about this item

    Keywords

    Oil Price; Food Price; Structural Vector Auto-regression; Impulse-response Function; Forecast Error Variance Decompositions; Ecuador;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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