Macroeconomic Effects of Oil Price Fluctuations in Colombia

  • Leonardo Quero-Virla Universidad del Zulia


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.


Americas Society-Council of the Americas. (2010). Colombia’s Energy Renaissance. Working paper of the Energy Action Group.

Baker Hughes. (2016). International Rig Count. Sourced from: http://phx.corporate- Accessed on November 26th, 2016.

Blanchard, O. & Galí, J. (2010). The Macroeconomic Effects of Oil Price Shocks. Why are the 2000s so different from 1970s?. In Gali, J. & Gertler, M. (Eds.), International Dimensions of Monetary Policy (pp. 373-421). National Bureau of Economic Research. University of Chicago Press.

Banco de la República de Colombia. (2016). Statistics. Sourced from: Accessed on October 16th, 2016.

BP. (2016). BP Statistical Review of World Energy – data workbook. Sourced from: world-energy/downloads.html. Accessed on October 16th, 2016.

Ecopetrol S.A. (2016). Reporte Integrado de Gestión Sostenible 2015. Sourced from: Accessed on September 20th, 2016.

Farzanegan, M.R. & Markwardt, G. (2009). The effects of oil price shocks on the Iranian economy. Energy Economics, 31(1), 134-151.

Hamilton, J. (1983). .Oil and the Macroeconomy since World War II. Journal of Political Economy, 91(2), 228-248

Hamilton, J. (1996). This is What Happened to the Oil Price Macro-economy Relationship. Journal of Monetary Economics, 38(2), 215-220.

International Monetary Fund. (2016). Global price of WTI Crude. Sourced from: Accesed on October 16th, 2016.

Kilian, L. (2013). Structural Vector Autoregressions. In Hashimzade, N., & Thornton, M. (Eds.), Handbook of Research Methods and Applications in Empirical Macroeconomics (pp. 515-554). Edward Elgar Publishing Limited.

Kilian, L. (2009). Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market. American Economic Review, 99(3), 1053-1069.

Kwiatkowski, D., Phillips, P., Schmidt, P. & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of unit root: How sure are we that economic time series have unit root?. Journal of Econometrics, 54, 159- 178.

Lorde, T., Jackman, M., Thomas, C. (2009). The macroeconomic effects of oil price fluctuations on a small open oil-producing country: The case of Trinidad and Tobago. Energy Policy, 37(7), 2708–2716

Lütkepohl, H., Krätzig, M. (2005). Applied Time Series Econometrics. Cambridge, UK: Cambridge University Press, pp. 210-215.

Lütkepohl, H. (2005). New Introduction to Multiple Time Series Analysis. Berlin, Germany: Springer, pp. 30-367.

Lütkepohl, H. (2011). Vector Autorregresive Models. Woking Paper ECO-2011/30. European University Institute.

Newey, W., West, K. (1994). Automatic Lag Selection in Covariance Matrix Estimation. Review of Economic Studies, 61(4), 631-653.

Sims, C. (1980). Macroeconomics and Reality. Econometrica, 48(1), 1-48.

Sims, C. (1986). Are Forecasting Models Usable for Policy Analysis?. Quarterly Review of the Federal Reserve of Minneapolis, 10(1), 1-16.

The World Bank. (2016). World Development Indicators. Sourced from: Accessed on October 16th, 2016.

Rotemberg, J., Woodford, M. (1996). Imperfect Competition and the Effects of Energy Price Increases on Economic Activity. Journal of Money, Credit and Banking, 28(4), 549-577.

U.S. Energy Information Administration. (2016). Country Analysis Brief: Colombia.
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: <>. Date accessed: 16 aug. 2017. doi:


SVAR, impulse-response, oil market, Colombia

Most read articles by the same author(s)

Obs.: This plugin requires at least one statistics/report plugin to be enabled. If your statistics plugins provide more than one metric then please also select a main metric on the admin's site settings page and/or on the journal manager's settings pages.