Oil prices, welfare, and the trade balance

Journal Article · Thu Nov 01 04:00:00 EST 1984 · Q. J. Econ.; (United States)

DOI:https://doi.org/10.2307/1883119· OSTI ID:6076373

Svensson, L E

The paper examines welfare effects and the trade balance response to changes in the world oil prices and interest rates for a small oil-importing economy. The trade balance is mainly seen as the difference between saving and investment, and these are derived from intertemporal optimization. It is shown that the welfare effects consist of static terms-of-trade effects, intertemporal terms-of-trade effects, and employment effects. The trade balance deteriorates for temporary oil price increases; whereas its response is ambiguous for permanent oil price increases. For a fall in the world interest rate, the trade balance deteriorates if the economy is a net borrower.

• Research Organization: Inst. for International Economic Studies, Stockholm, Sweden
• OSTI ID: 6076373
• Journal Information: Q. J. Econ.; (United States), Journal Name: Q. J. Econ.; (United States) Vol. 99:4; ISSN QJECA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002 -- Energy Planning & Policy-- Petroleum
ECONOMIC IMPACT
ENERGY EXPENSES
ENERGY SOURCES
FOSSIL FUELS
FUELS
OIL-IMPORTING COUNTRIES
PETROLEUM
PRICES
TRADE