Oil price shocks and economic resilience: A comparative analysis of Norway and Portugal

• Autor(a) principal: Baroeth, André Moura Venâncio
• Data de Publicação: 2023
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/30275
• topic: Oil prices; Business cycle; VAR model; Portugal; Norway; Preço do petróleo; Ciclo económico; Modelo VAR; Portugal; Noruega

This research delves into the complex relationship between crude oil price volatility and key macroeconomic economic indicators, i.e., real GDP growth rate (GDPGR), inflation rate (IR), export growth rate (EXPGR), unemployment rate (UR), production of total industry growth rate (PTI) and private final consumption expenditure growth rate (CSPE). The study gathered time-series data (Q1:1988–Q4:2021) from Norway and Portugal, utilizing macroeconomic policy modeling tools such as Granger causality, impulse response functions and variance decomposition analysis within the framework of a vector autoregressive (VAR) model. Oil prices presented a positive influence over the Norwegian economy. The results gathered in our study show a significant increase in the exports rate after a one standard deviation shock in oil prices. The causal relationship observed highlights the significant role of favorable oil price changes in driving growth in the Norwegian export sector. Portugal demonstrates vulnerabilities in response to these shocks. The effects surface with pronounced negative impacts on the overall economy only 1 year after the shock. Subsequent recoveries underscore Portugal's capacity to absorb and adapt to oil prices fluctuations. Based on the impulse response functions and variance decomposition analysis I found that oil price shocks only had a statistically significant impact over the export growth rate in Norway. From a practical standpoint, the study offers valuable insights for policymakers in both nations, assisting in the development of well-informed policies to mitigate the effects of oil price fluctuations and promote sustainable economic development.