Do heterogeneous countries respond differently to oil price shocks?

The article studies the macroeconomic impact of oil price changes driven by oil supply, oil-specific demand and economic activity shocks in 17 highly heterogeneous countries. Countries are classified in seven groups: advanced, emerging, oil exporters, oil importers, with energy price controls and without energy price controls. We study the response of industrial activity, inflation, interest rates and exchange rates to oil price shocks. The results show that the level of development is the main factor explaining the differences in the way countries react to oil price shocks. Then, such differences can be condensed comparing two groups: advanced vs. emerging economies. Remarkably, our results indicate that there are no significant differences in the response of industrial production between oil exporters and importers. This suggests an important reduction in the profits for oil exporters derived from increases in oil prices. We posit, as potential explanations of the latter finding the recent evolution of the export markets, the decline in the energy intensity of the global economy and the degree of trade openness.