Implications of Cheap Oil for Emerging Markets
The COVID-19-triggered collapse in oil prices in March and April 2020 was the seventh, and by far the most severe, in a series of such collapses since 1970. This paper, first, compares this most recent collapse and its drivers with previous ones in...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/800281600695886152/Implications-of-Cheap-Oil-for-Emerging-Markets http://hdl.handle.net/10986/34501 |
| Summary: | The COVID-19-triggered collapse in oil
prices in March and April 2020 was the seventh, and by far
the most severe, in a series of such collapses since 1970.
This paper, first, compares this most recent collapse and
its drivers with previous ones in an event study. It finds
that it was associated with an exceptionally severe plunge
in oil demand. Second, in a local projections model, this
paper estimates the implications of demand- and
supply-driven oil price collapses for growth in emerging
markets and developing economies (EMDEs). The paper finds
that steep oil price collapses were associated with
significant and lasting output losses in energy-exporting
EMDEs but no meaningful output gains in energy-importing
EMDEs. These results are robust to multiple robustness checks. |
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