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Indirect impacts of oil prices on economic growth in Colombia

Author

Listed:
  • Sergio González

    (Universidad Nacional de Colombia)

  • Edwin Hernández

    (Universidad Nacional de Colombia)

Abstract

In this paper, we study the relationship between oil prices and macroeconomic variables such as gross domestic product (GDP), real exchange rate, fiscal balance, among others, in Colombia during two time periods: 1982-2013 and 2000-2013. We use vector autoregressive models to analyze impulse-response functions; also, we use transformations of oil prices allowing contrast of different hypotheses on the transmission of price shocks to the economy. Further, we contrast Colombian and international evidence regarding the hypothesis that the main channel of transmission of oil price shocks is private consumption. We find evidence of a relationship between consumption and GDP for both time periods. Particularly in the period 2000-2013, when the oil sector has gained participation in the Colombian economy, it is found that private consumption serves as an indirect transmission channel of oil prices into GDP.

Suggested Citation

  • Sergio González & Edwin Hernández, 2016. "Indirect impacts of oil prices on economic growth in Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 84, pages 103-141, Enero - J.
    • Handle: RePEc:lde:journl:y:2016:i:84:p:103-141
    DOI: 10.17533/udea.le.n84a04
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    More about this item

    Keywords

    oil prices; indirect impacts; impulse-response functions;
    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
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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