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Oil price shocks and the Portuguese economy since the 1970s

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  • Pedro Brito Robalo
  • João Cotter Salvado

Abstract

This paper assesses empirically the effect of oil price shocks on Portuguese aggregate economic activity, industrial production and price level. We take the usual multivariate VAR methodology to investigate the magnitude and stability of this relationship. In doing so, we follow the approach presented in the recent literature and adopt different oil price specifications. We conclude that, as for most industrialized countries, the nature of this relationship changed in the mid-1980s. Furthermore, we show that the main Portuguese macroeconomic variables have become progressively less responsive to oil shocks and the adjustment towards equilibrium has become increasingly faster.

Suggested Citation

  • Pedro Brito Robalo & João Cotter Salvado, 2008. "Oil price shocks and the Portuguese economy since the 1970s," Nova SBE Working Paper Series wp529, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp529
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    References listed on IDEAS

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    1. Hamilton, James D., 1996. "This is what happened to the oil price-macroeconomy relationship," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 215-220, October.
    2. Lutz Kilian, 2008. "Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy?," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 216-240, May.
    3. Finn, Mary G, 2000. "Perfect Competition and the Effects of Energy Price Increases on Economic Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 400-416, August.
    4. Gisser, Micha & Goodwin, Thomas H, 1986. "Crude Oil and the Macroeconomy: Tests of Some Popular Notions: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 95-103, February.
    5. Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-751, September.
    6. Hooker, Mark A, 2002. "Are Oil Shocks Inflationary? Asymmetric and Nonlinear Specifications versus Changes in Regime," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 540-561, May.
    7. Hamilton, James D., 2003. "What is an oil shock?," Journal of Econometrics, Elsevier, vol. 113(2), pages 363-398, April.
    8. Eastwood, Robert K, 1992. "Macroeconomic Impacts of Energy Shocks," Oxford Economic Papers, Oxford University Press, vol. 44(3), pages 403-425, July.
    9. Hooker, Mark A., 1996. "This is what happened to the oil price-macroeconomy relationship: Reply," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 221-222, October.
    10. Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
    11. Prachowny,Martin F. J., 1986. "Money in the Macroeconomy," Cambridge Books, Cambridge University Press, number 9780521315944, October.
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    Cited by:

    1. Akinlo A. Enisan, 2020. "Asymmetric impacts of oil price shocks on unemployment: Evidence from Nigeria," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(1), pages 63-78, June.
    2. Susana Silva & Isabel Soares & Carlos Pinho, 2012. "The Impact of Renewable Energy Sources on Economic Growth and CO2 Emissions - a SVAR approach," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 133-144.
    3. Isiaka Akande Raifu & Alarudeen Aminu & Abiodun O. Folawewo, 2020. "Investigating the relationship between changes in oil prices and unemployment rate in Nigeria: linear and nonlinear autoregressive distributed lag approaches," Future Business Journal, Springer, vol. 6(1), pages 1-18, December.
    4. Joao Tovar Jalles, 2009. "Do Oil Prices Matter? The Case of a Small Open Economy," Annals of Economics and Finance, Society for AEF, vol. 10(1), pages 65-87, May.
    5. Veli Yılancı & Emel İslamoğlu & Sinem Yıldırımalp & Gökçe Candan, 2020. "The Relationship between Unemployment Rates and Renewable Energy Consumption: Evidence from Fourier ADL Cointegration Test," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 8(1), pages 17-28, June.
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    More about this item

    Keywords

    Oil price shocks; Granger causality; impulse response analysis;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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