Oil Prices and Competitiveness: Evidence from a Group of Oil Producing Countries, Working Paper

Comments are welcome. Abstract: This paper studies potential loss of competitiveness in a group of oil producing countries due to oil price shocks. The paper extends the original work of Edwards (1984), including extension to six countries, and using a more suitable estimation technique to estimate model parameters in a dynamic setting. Empirical results of the study support the hypothesis that oil price shocks may indeed cause loss of competitiveness in lower income producers. On the other hand, high income producers seem to be able to neutralize adverse effects of oil price shocks and avoid loss of competitiveness