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The effects of oil price on regional economies with different production structures: A case study from Korea using a structural VAR model

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  • Park, Chuhwan
  • Chung, Mo
  • Lee, Sukgyu

Abstract

This study analyzes the effects of oil price fluctuations on regional macroeconomic variables with a structural VAR model. We classified fifteen metropolitan cities and provinces of Korea into four major regions (Capital, Central, Honam, and Gyeongsang) and examined the effects of oil price fluctuations on the economy of these regions. The results in the short- and long-term lag structures show a negative response to industrial production and price. The Capital region is less affected by oil price fluctuations than the other three provincial regions. We concluded that the government should focus on creating an industrial environment to accumulate production factors and technologies in oil price-sensitive regions.

Suggested Citation

  • Park, Chuhwan & Chung, Mo & Lee, Sukgyu, 2011. "The effects of oil price on regional economies with different production structures: A case study from Korea using a structural VAR model," Energy Policy, Elsevier, vol. 39(12), pages 8185-8195.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:12:p:8185-8195
    DOI: 10.1016/j.enpol.2011.10.018
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    7. Boufateh, Talel & Ajmi, Ahdi Noomen & El Montasser, Ghassen & Issaoui, Fakhri, 2013. "Dynamic relationship between energy consumption and income in Tunisia: A SVECM approach," MPRA Paper 44539, University Library of Munich, Germany.
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