Macroeconomic Effects of Oil Price Fluctuations in Colombia

  • Leonardo Quero-Virla Universidad del Zulia

Abstract

This research aims to study the effects of oil price changes on the Colombian economy during 2001:Q1 to 2016:Q2. A structural vector auto-regression model in the spirit of Blanchard and Galí (2010) is estimated under a recursive identification scheme, where unexpected oil price variations are exogenous relative to the contemporaneous values of the remaining variables. Drawing on impulse-response estimates, a 10% increase in the oil price generates the following accumulated orthogonalized responses: i) a contemporaneous 0.4% increase in GDP growth, later on the effect reaches its maximum in the first quarter (1.7% increase) and starts to decay after two quarters; ii) a contemporaneous 1.2% decrease in unemployment, then the effect remains slightly negative and reaches its maximum after ten quarters (5.1% decrease); iii) a contemporaneous 0.9% decrease in inflation, followed by an 0.2% increase by quarter three, and thereafter the effect remains slightly negative.

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Published
2016-12-02
How to Cite
QUERO-VIRLA, Leonardo. Macroeconomic Effects of Oil Price Fluctuations in Colombia. Ecos de Economía: A Latin American Journal of Applied Economics, [S.l.], v. 20, n. 43, dec. 2016. ISSN 2462-8107. Available at: <http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4181>. Date accessed: 16 aug. 2017. doi: https://doi.org/10.17230/ecos.2016.43.2.
Section
Articles

Keywords

SVAR, impulse-response, oil market, Colombia

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