Inflation, dollar depreciation, and OPEC's purchasing power
Inflation, which has depreciated the value of the dollar, directly affects the real export earnings of the Organization of Petroleum Exporting Countries (OPEC) and has led to speculation that OPEC could change its pricing mechanism from the dollar to a currency basket. The impact of dollar depreciation during the 1972--77 period is analyzed to determine how much the impact on OPEC's trade is due to the dollar decline and how much to inflation in the industrial countries. Results indicate that, while 16.24 percent of OPEC's terms of trade decline can be traced to dollar fluctuations, 63.2 percent is due to inflation. The impact on individual OPEC countries was felt the hardest by Indonesia and the least by Libya, with the other countries feeling a generally uniform impact, the differences reflecting variations in trade structure and currency behavior.
- Research Organization:
- Massacusetts Inst. of Tech., Cambridge
- OSTI ID:
- 6073618
- Journal Information:
- J. Energy Dev.; (United States), Journal Name: J. Energy Dev.; (United States) Vol. 4:2; ISSN JENDD
- Country of Publication:
- United States
- Language:
- English
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ECONOMETRICS
ECONOMIC ANALYSIS
ECONOMIC IMPACT
ECONOMICS
ENERGY SOURCES
FOSSIL FUELS
FUELS
INFLATION
INTERNATIONAL ORGANIZATIONS
MARKET
OIL-EXPORTING COUNTRIES
OPEC
PETROLEUM
PROFITS