Oil prices, economic activity and inflation: evidence for some Asian countries

• Published in: The Quarterly review of economics and finance Vol. 45; no. 1; pp. 65 - 83
• Main Authors: Cunado, J., Perez de Gracia, F.
• Format: Journal Article
• Language: English
• Published: Greenwich Elsevier Inc 01-02-2005; Elsevier; Elsevier Science Ltd
• Series: The Quarterly Review of Economics and Finance
• Subjects: Commodity prices; Consumer Price Index; Economic activity; Inflation; Oil; Oil price shocks; Prices; Studies; Asia; Economic activity; Q43; Inflation; O53; E32; Oil price shocks
• ISSN: 1062-9769; 1878-4259
• DOI: 10.1016/j.qref.2004.02.003

In this paper we study the oil prices–macroeconomy relationship by means of studying the impact of oil price shocks on both economic activity and consumer price indexes for six Asian countries over the period 1975Q1–2002Q2. The results suggest that oil prices have a significant effect on both economic activity and price indexes, although the impact is limited to the short run and more significant when oil price shocks are defined in local currencies. Moreover, we find evidence of asymmetries in the oil prices–macroeconomy relationship for some of the Asian countries.