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The effects of oil price shocks on the Korean economy

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Frame of Image rly 2000s. Then it re-accelerated until another sharp
drop in the middle of 2008. Since the last drop, the real price of oil has been once again on its rise. The purpose of this article is to provide empirical evidence regarding the following questions: How do oil price shocks affect the macroeconomy? Is the
Source : FRED , Federal Reserve Bank of St. Louis. Note : The price of West Texas Intermediate crude oil (Series ID:OILPRICE) is deflated by the U.S. consumer price index (Series ID:CPIAUCNS). The U.S. CPI is adjusted such that the index equals to 100 in August 2011.
Korean economy more vulnerable to oil price shocks than other OECD countries? Which components of GDP expenditure and which sectors of the economy are most affected by the shocks to oil prices? To answer these questions, this article begins in Section 2 by reviewing the literature on the macroeconomic impacts of oil price shocks. Section 3 presents empirical results for the case of Korea. Section 4 concludes.
2. Oil and the Macroeconomy: Literature Review
(1) Supply-side Channels
Economists have long struggled to explain the relationship between oil prices and macroeconomy. Existing studies suggest that transmission channels by which oil price shocks affect the macroeconomy can be grouped into two categories: supply-side and demand-side channels.1) Among the explanations offered for the supply-side mechanism, the simplest one is that an increase in the price of oil reduces the amount of oil u s e d for produc


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Title The effects of oil price shocks on the Korean economy
Similar Titles
Material Type Reports
Author(English)

Hwang, Sunoong

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2011
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 16(no. 5)
Pages 14
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Holding KIET; KDI School

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