News shocks in open economies: evidence from giant oil discoveries
This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present...
| Main Authors: | , , |
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| Format: | Working paper |
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University of Oxford
2015
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| _version_ | 1797098856578547712 |
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| author | Arezki, R Ramey, V Sheng, L |
| author_facet | Arezki, R Ramey, V Sheng, L |
| author_sort | Arezki, R |
| collection | OXFORD |
| description | This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time. |
| first_indexed | 2024-03-07T05:15:40Z |
| format | Working paper |
| id | oxford-uuid:dd183b63-b0f1-43f7-8420-d7ac9cc64400 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T05:15:40Z |
| publishDate | 2015 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:dd183b63-b0f1-43f7-8420-d7ac9cc644002022-03-27T09:22:31ZNews shocks in open economies: evidence from giant oil discoveriesWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:dd183b63-b0f1-43f7-8420-d7ac9cc64400Bulk import via SwordSymplectic ElementsUniversity of Oxford2015Arezki, RRamey, VSheng, LThis paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time. |
| spellingShingle | Arezki, R Ramey, V Sheng, L News shocks in open economies: evidence from giant oil discoveries |
| title | News shocks in open economies: evidence from giant oil discoveries |
| title_full | News shocks in open economies: evidence from giant oil discoveries |
| title_fullStr | News shocks in open economies: evidence from giant oil discoveries |
| title_full_unstemmed | News shocks in open economies: evidence from giant oil discoveries |
| title_short | News shocks in open economies: evidence from giant oil discoveries |
| title_sort | news shocks in open economies evidence from giant oil discoveries |
| work_keys_str_mv | AT arezkir newsshocksinopeneconomiesevidencefromgiantoildiscoveries AT rameyv newsshocksinopeneconomiesevidencefromgiantoildiscoveries AT shengl newsshocksinopeneconomiesevidencefromgiantoildiscoveries |