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The Macroeconomic effects of oil price shocks on ASEAN-5 economies

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Raghavan, M (2015) The Macroeconomic effects of oil price shocks on ASEAN-5 economies. Discussion Paper. University of Tasmania. (Submitted)

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Abstract

ASEAN-5's continued economic growth with high oil and trade intensities means
it is a fast growing region with a significant presence in the global energy market.
This paper identities three main drivers of oil price shocks - oil-supply, global-
activity and oil-specific demand shocks for the period 2000-2013. Subsequently,
it assesses the effects of the identified oil shocks on the ASEAN-5's macroeco-
nomic variables and examines the responses of monetary policy. Since the recent
shocks are largely demand driven, the impulse responses and historical decom-
position for the ASEAN-5 highlight that the effects on inflation are accentuated
while the effects on economic growth are less disruptive. The exchange rate re-
sponses are mostly positive while the effects on trade are positive for Malaysia, a
net oil exporter and are moderately negative for the oil importers. Consequently
the ASEAN-5's central banks could tighten their monetary policy in response
to higher inflation without fear of weakening their economies. The empirical
results highlight that for monetary policy responses to be more supportive of
growth, policy makers in these economies should examine the underlying causes
of the future oil shocks.

Item Type: Report (Discussion Paper)
Keywords: Macroeconomics, Oil prices, Emerging Asia, Monetary Policy
Publisher: University of Tasmania
Date Deposited: 15 Jan 2016 01:12
Last Modified: 15 Jan 2016 01:12
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