Asymmetric impact of oil price on current account balance: Evidence from oil importing countries

This study investigates the asymmetric linkage between oil price and current account balance (CAB) in ten oilimporting emerging countries by employing a unique Quantile-on-Quantile methodology. The estimations reveal that the oil price is adversely related to CAB in selected economies at various quantiles of data distribution. The findings suggest that the impact of oil prices on CAB is asymmetric, with increases having a more significant negative effect than decreases having a positive effect. Furthermore, the effect of oil prices on CAB is more significant for net oil importers that have a higher dependency on oil imports. Finally, the findings highlight the need for policymakers in oil-importing countries to recognize the non-linear relationship between oil prices and CAB.

Automated summary

This study examines the asymmetric linkage between oil price and current account balance (CAB) in ten oil-importing emerging countries using a unique Quantile-on-Quantile methodology. The results indicate that oil price is negatively associated with CAB in selected economies across different quantiles of data distribution. The findings suggest that the impact of oil prices on CAB is asymmetric, with increases having a more significant negative effect compared to decreases having a positive effect. Additionally, the effect of oil prices on CAB is more pronounced for net oil importers with a higher reliance on oil imports. The study highlights the importance for policymakers in oil-importing countries to recognize the non-linear relationship between oil prices and CAB.