How do oil price shocks affect a small non-oil producing economy? Evidence from Hong Kong
Document Type
Journal article
Source Publication
Pacific Economic Review
Publication Date
5-1-2010
Volume
15
Issue
2
First Page
263
Last Page
280
Publisher
Wiley-Blackwell Publishing Asia
Abstract
We find no evidence from either in-sample or out-of-sample analyses that an oil price shock would necessarily affect a small non-oil producing economy such as Hong Kong. In our in-sample recursive vector autoregressive investigations, oil price does not Granger cause the key macroeconomic indicators. The forecast errors from our out-of-sample examination using a vector error correction model with oil shocks, which represents an extension to previous studies, were found to be statistically the same as those from the vector error correction model without these shocks. The analysis leads us to dispel the conventional wisdom that a small non-oil producing economy is more vulnerable to oil shocks than a larger oil-producing economy such as the USA.
DOI
10.1111/j.1468-0106.2010.00501.x
Print ISSN
1361374X
E-ISSN
14680106
Publisher Statement
Copyright © 2010 The Authors. Journal compilation © 2010 Blackwell Publishing Asia Pty Ltd
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Ran, J., Voon, J. P., & Li, G. (2010). How do oil price shocks affect a small non-oil producing economy? Evidence from Hong Kong. Pacific Economic Review, 15(2), 263-280. doi: 10.1111/j.1468-0106.2010.00501.x