Publication Type

Journal Article

Publication Date

2016

Abstract

This paper studies the impact of a wide set of energy price shocks on exter- nal balances using a two-country framework comprising multiple sectors and en- dogenous energy production with convex costs. The paper disentangles different demand and supply shocks in the energy market through their distinct impact on external balances. It provides a theoretical confirmation of Kilian et al. (2009) and a theoretical foundation to the determining role of the non-energy trade balance in the transmission of energy price shocks. The presence of durables also highlights the immediate channel through which energy prices impact the non-energy trade balance.

Keywords

energy, energy price shock, trade, DSGE model, external balances

Discipline

Macroeconomics

Research Areas

Macroeconomics; International Economics

Publication

Canadian Journal of Economics

Embargo Period

7-3-2016

Copyright Owner and License

Canadian Journal of Economics

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