The trade consequences of pricey oil
This paper examines the trade and trade-induced welfare effects of high oil prices. Using a gravity model of trade we find that the distance elasticity of trade significantly increases with the oil price. This suggests that high oil prices make trade less global. We estimate that an increase in the...
| Main Authors: | , |
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| Format: | Working paper |
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University of Oxford
2013
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| _version_ | 1797071818628005888 |
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| author | Below, D Vezina, P |
| author_facet | Below, D Vezina, P |
| author_sort | Below, D |
| collection | OXFORD |
| description | This paper examines the trade and trade-induced welfare effects of high oil prices. Using a gravity model of trade we find that the distance elasticity of trade significantly increases with the oil price. This suggests that high oil prices make trade less global. We estimate that an increase in the oil price from 100$ to 200$ would have the similar effect as imposing a world-wide import tariff between 4% and 9%, depending on the distance between countries. In turn, such higher trade costs would lower welfare by 1.8% in the average non-oil-exporting country. |
| first_indexed | 2024-03-06T22:58:43Z |
| format | Working paper |
| id | oxford-uuid:615466cf-6c3e-409c-bd98-94e7930845b7 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T22:58:43Z |
| publishDate | 2013 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:615466cf-6c3e-409c-bd98-94e7930845b72022-03-26T17:59:07ZThe trade consequences of pricey oilWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:615466cf-6c3e-409c-bd98-94e7930845b7Bulk import via SwordSymplectic ElementsUniversity of Oxford2013Below, DVezina, PThis paper examines the trade and trade-induced welfare effects of high oil prices. Using a gravity model of trade we find that the distance elasticity of trade significantly increases with the oil price. This suggests that high oil prices make trade less global. We estimate that an increase in the oil price from 100$ to 200$ would have the similar effect as imposing a world-wide import tariff between 4% and 9%, depending on the distance between countries. In turn, such higher trade costs would lower welfare by 1.8% in the average non-oil-exporting country. |
| spellingShingle | Below, D Vezina, P The trade consequences of pricey oil |
| title | The trade consequences of pricey oil |
| title_full | The trade consequences of pricey oil |
| title_fullStr | The trade consequences of pricey oil |
| title_full_unstemmed | The trade consequences of pricey oil |
| title_short | The trade consequences of pricey oil |
| title_sort | trade consequences of pricey oil |
| work_keys_str_mv | AT belowd thetradeconsequencesofpriceyoil AT vezinap thetradeconsequencesofpriceyoil AT belowd tradeconsequencesofpriceyoil AT vezinap tradeconsequencesofpriceyoil |