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Oil shocks and production network structure: Evidence from the OECD

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  • Caraiani, Petre

Abstract

Does the production network structure matter for the transmission of oil shocks? Using a Bayesian time-varying VAR, the paper derives the impact of oil shocks on GDP for a set of OECD economies. It further estimates various measures to characterize the production network structure based on Input–Output matrices. When the relationship between the time-varying responses of GDP to oil demand and oil supply shocks and production network characteristics is analyzed, the paper finds that measures like skewness in the in-degrees and in the out-degrees or density tend to amplify the negative impact of oil shocks on GDP. The results here are in line with the recent literature that outlines the importance of network structures for aggregate dynamics.

Suggested Citation

  • Caraiani, Petre, 2019. "Oil shocks and production network structure: Evidence from the OECD," Energy Economics, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:eneeco:v:84:y:2019:i:c:s0140988319303548
    DOI: 10.1016/j.eneco.2019.104559
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    Cited by:

    1. Petre Caraiani, 2023. "Monetary Policy Shocks and Input–Output Characteristics of Production Networks," JRFM, MDPI, vol. 16(3), pages 1-13, March.
    2. Caraiani, Petre, 2023. "Oil news shocks, inflation expectations and social connectedness," Energy Economics, Elsevier, vol. 127(PB).
    3. Wei, Na & Xie, Wen-Jie & Zhou, Wei-Xing, 2022. "Robustness of the international oil trade network under targeted attacks to economies," Energy, Elsevier, vol. 251(C).
    4. Caraiani, Petre & Dutescu, Adriana & Hoinaru, Răzvan & Stănilă, Georgiana Oana, 2020. "Production network structure and the impact of the monetary policy shocks: Evidence from the OECD," Economics Letters, Elsevier, vol. 193(C).
    5. Na Wei & Wen-Jie Xie & Wei-Xing Zhou, 2024. "Resilience of international oil trade networks under extreme event shock-recovery simulations," Papers 2406.11467, arXiv.org.
    6. Caraiani, Petre, 2022. "The impact of oil supply news shocks on corporate investments and the structure of production network," Energy Economics, Elsevier, vol. 110(C).
    7. N. Wei & W. -J. Xie & W. -X. Zhou, 2021. "Robustness of the international oil trade network under targeted attacks to economies," Papers 2101.10679, arXiv.org, revised Jan 2021.
    8. Xie, Wen-Jie & Wei, Na & Zhou, Wei-Xing, 2023. "An interpretable machine-learned model for international oil trade network," Resources Policy, Elsevier, vol. 82(C).

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    More about this item

    Keywords

    Oil shocks; VAR; Bayesian methods; Production network structures;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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