Effects Of Oil Shocks On Macroeconomics Of The Selected OECD Countries

Conducted research on the relationships between oil shocks and macroeconomic variables has evolved a lot over the past years. Developed empirical and theoretical models triggered the need to recall different types of shocks and its effect on certain macroeconomic variables. In this thesis, Structural Vector Autoregressive Model (SVAR) has been used in order to analyse the extent to which crude oil supply, aggregate oil demand and oil market-specific demand shocks can affect GDP growth rate, consumer price index and short-term interest rates of analysed oil-exporting countries: Norway and United Kingdom and oil-importing ones: Germany and USA. The results have shown that the strength of the oil market-specific demand shock is the strongest among the rest of the shocks analysed. There is observed a clear positive effect for oil-exporting countries and negative impact for oil-importing ones. However, when analysing crude oil supply and aggregate demand shocks of oil-exporting countries, I have found out that the direction of the shock depends on the extend of the disruptions either from supply or demand side. Oil-dependency in the industrial structure of the oil-importing economies is also a significant factor affecting the vulnerability of the country and explosiveness to any shock. Also, I have discovered that short-term interest rates tend to fluctuate in the same direction as the inflation when oil production levels are changing. In addition, the direction of the effect depends on the monetary authorities' targets and policies implemented. These vary with no regard whether the country is oil-importing or oil-exporting