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Global Oil Price Swings and Shipping Disruptions: Do They Matter for Malta?

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  • Germano Ruisi

Abstract

Recent years have been characterised by the COVID-19 outbreak, a sharp contraction in global economic activity in 2020 and a remarkable rebound in 2021, though with continued supply disruptions. Energy and commodity prices were further fuelled by the war in Ukraine. As a result of these factors, oil prices and shipping costs experienced large swings, which in turn led to high inflationary pressures not seen since the early 1980s. Against this background, this study compares the developments in inflation between Malta and the euro area as well as its member countries. It also aims at assessing the effect that oil price swings and disruptions in the shipping industry at the global level exert on the Maltese economy, with emphasis on HICP inflation and its main sub-indices. As of September 2022, the Maltese headline inflation (7.4%) is the second lowest in the euro area right after France (6.2%) and far from the peak value of 24.1% reached in Estonia. Moreover, oil price swings and, to a lesser extent, disruptions in the shipping industry appear to produce recessionary effects while raising several inflation sub-indices. Finally, the energy subsidies implemented by the Maltese government since July 2021 helped reducing the negative effects of the two disturbances.

Suggested Citation

  • Germano Ruisi, "undated". "Global Oil Price Swings and Shipping Disruptions: Do They Matter for Malta?," CBM Policy Papers PP/07/2022, Central Bank of Malta.
    • Handle: RePEc:mlt:ppaper:0722
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    File URL: https://www.centralbankmalta.org/site/Publications/Economic%20Research/2022/Oil-Price-Swings-Shipping-Disruptions.pdf?revcount=2014
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    References listed on IDEAS

    as
    1. Christiane Baumeister & Gert Peersman, 2013. "The Role Of Time‐Varying Price Elasticities In Accounting For Volatility Changes In The Crude Oil Market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1087-1109, November.
    2. Lutz Kilian & Logan T. Lewis, 2011. "Does the Fed Respond to Oil Price Shocks?," Economic Journal, Royal Economic Society, vol. 121(555), pages 1047-1072, September.
    3. Christiane Baumeister & Gert Peersman, 2013. "Time-Varying Effects of Oil Supply Shocks on the US Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(4), pages 1-28, October.
    4. Ellul, Reuben, 2016. "A real-time measure of business conditions in Malta," MPRA Paper 75057, University Library of Munich, Germany.
    5. William Gatt & Germano Ruisi, 2022. "The spillover of euro area shocks to the Maltese economy," CBM Working Papers WP/03/2022, Central Bank of Malta.
    6. Owen Grech & Noel Rapa, 2016. "STREAM: A structural macro-econometric model of the Maltese economy," CBM Working Papers WP/01/2016, Central Bank of Malta.
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    More about this item

    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
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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