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Crude oil trade and current account deficits: replication and extension

Author

Listed:
  • Andrew Musau

    (Inland Norway University of Applied Sciences)

  • Steinar Veka

    (Inland Norway University of Applied Sciences)

Abstract

Huntington (Energy Economics, 50, 70–79) explores the association between oil trade and a nation’s current account balance using a sample of 91 countries observed over the years 1984–2009. Differentiating exporters from importers, he finds that net oil exports are significant in explaining current account surpluses but net oil imports do not explain current account deficits. We successfully replicate this result after expanding the sample of countries by two-fifths and increasing the time frame to include recent periods of high volatility in oil prices. Furthermore, we investigate differences in the oil trade–current account association between countries grouped in terms of income per capita as well as the association between oil trade and the different components that constitute the current account. Our results reveal a positive association between net oil export balance and the trade balance component but no association with the non-trade balance component, suggesting the dominance of the former.

Suggested Citation

  • Andrew Musau & Steinar Veka, 2020. "Crude oil trade and current account deficits: replication and extension," Empirical Economics, Springer, vol. 58(2), pages 875-897, February.
    • Handle: RePEc:spr:empeco:v:58:y:2020:i:2:d:10.1007_s00181-018-1522-8
    DOI: 10.1007/s00181-018-1522-8
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    Citations

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    Cited by:

    1. Baek, Jungho & Yoon, Jee Hee, 2022. "Do macroeconomic activities respond differently to oil price shocks? New evidence from Indonesia," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 852-862.
    2. Abiodun Adegboye & Olawale Daniel Akinyele, 2022. "Assessing the determinants of government spending efficiency in Africa," Future Business Journal, Springer, vol. 8(1), pages 1-17, December.
    3. Baek, Jungho & Yoon, Jee Hee, 2023. "Shocks of crude oil prices and world trade policy uncertainty: How much do they matter for China’s trade balance with its three largest partners?," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 914-921.
    4. Baek, Jungho, 2023. "A new look at the crude oil shocks and trade nexus: Evidence from bilateral trade between Korea and its three largest partners," Resources Policy, Elsevier, vol. 85(PA).
    5. Jungho Baek, 2023. "Oil Prices, World Trade Policy Uncertainty, and the Trade Balance: The Case of Korea," Commodities, MDPI, vol. 2(3), pages 1-13, June.
    6. Jungho Baek, 2022. "Not all oil shocks on the trade balance are alike: Empirical evidence from South Korea," Australian Economic Papers, Wiley Blackwell, vol. 61(2), pages 291-303, June.

    More about this item

    Keywords

    Current account; Oil trade; Cross-country analysis;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Crude oil trade and current account deficits: replication and extension (Emp Econ 2020) in ReplicationWiki

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