Publicação
OPEC´s oil exporting strategy and macroeconomic (in) stability
| Resumo: | Aguiar-Conraria and Wen (2008) argued that dependence on foreign oil raises the likelihood of equilibrium indeterminacy (economic instability) for oil importing countries. We argue that this relation is more subtle. The endogenous choices of prices and quantities by a cartel of oil exporters, such as the OPEC, can affect the directions of the changes in the likelihood of equilibrium indeterminacy. We show that fluctuations driven by self-fulfilling expectations under oil shocks are easier to occur if the cartel sets the price of oil, but the result is reversed if the cartel sets the quantity of production. These results offer a potentially interesting explanation for the decline in economic volatility (i.e., the Great Moderation) in oil importing countries since the mid-1980s when the OPEC cartel changed its market strategies from setting prices to setting quantities, despite the fact that oil prices are far more volatile today than they were 30 years ago. |
|---|---|
| Autores principais: | Conraria, Luís Aguiar |
| Outros Autores: | Wen, Yi |
| Assunto: | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| Ano: | 2011 |
| País: | Portugal |
| Tipo de documento: | working paper |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade do Minho |
| Idioma: | inglês |
| Origem: | RepositóriUM - Universidade do Minho |
| _version_ | 1866877811277430784 |
|---|---|
| author | Conraria, Luís Aguiar |
| author2 | Wen, Yi |
| author2_role | author |
| author_facet | Conraria, Luís Aguiar Wen, Yi |
| author_role | author |
| contributor_name_str_mv | Universidade do Minho |
| country_str | PT |
| creators_json_txt | [{\"Person.name\":\"Conraria, Luís Aguiar\"},{\"Person.name\":\"Wen, Yi\"}] |
| datacite.contributors.contributor.contributorName.fl_str_mv | Universidade do Minho |
| datacite.creators.creator.creatorName.fl_str_mv | Conraria, Luís Aguiar Wen, Yi |
| datacite.date.Accepted.fl_str_mv | 2011-03-01T00:00:00Z |
| datacite.date.available.fl_str_mv | 2011-03-28T14:33:26Z |
| datacite.date.embargoed.fl_str_mv | 2011-03-28T14:33:26Z |
| datacite.rights.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| datacite.subjects.subject.fl_str_mv | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| datacite.titles.title.fl_str_mv | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| dc.contributor.none.fl_str_mv | Universidade do Minho |
| dc.creator.none.fl_str_mv | Conraria, Luís Aguiar Wen, Yi |
| dc.date.Accepted.fl_str_mv | 2011-03-01T00:00:00Z |
| dc.date.available.fl_str_mv | 2011-03-28T14:33:26Z |
| dc.date.embargoed.fl_str_mv | 2011-03-28T14:33:26Z |
| dc.format.none.fl_str_mv | application/pdf |
| dc.identifier.none.fl_str_mv | https://hdl.handle.net/1822/11993 |
| dc.language.none.fl_str_mv | eng |
| dc.publisher.none.fl_str_mv | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
| dc.rights.none.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| dc.subject.none.fl_str_mv | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| dc.title.fl_str_mv | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| dc.type.none.fl_str_mv | http://purl.org/coar/resource_type/c_8042 |
| description | Aguiar-Conraria and Wen (2008) argued that dependence on foreign oil raises the likelihood of equilibrium indeterminacy (economic instability) for oil importing countries. We argue that this relation is more subtle. The endogenous choices of prices and quantities by a cartel of oil exporters, such as the OPEC, can affect the directions of the changes in the likelihood of equilibrium indeterminacy. We show that fluctuations driven by self-fulfilling expectations under oil shocks are easier to occur if the cartel sets the price of oil, but the result is reversed if the cartel sets the quantity of production. These results offer a potentially interesting explanation for the decline in economic volatility (i.e., the Great Moderation) in oil importing countries since the mid-1980s when the OPEC cartel changed its market strategies from setting prices to setting quantities, despite the fact that oil prices are far more volatile today than they were 30 years ago. |
| dirty | 0 |
| eu_rights_str_mv | openAccess |
| format | workingPaper |
| fulltext.url.fl_str_mv | https://prod-dspace.uminho.pt/bitstreams/be85fcb1-30e6-4b60-9d9f-bfd827b254ce/download |
| id | rum_b1cb98906fcd8a87d239ff1a331c1805 |
| identifier.url.fl_str_mv | https://hdl.handle.net/1822/11993 |
| instacron_str | repositorium |
| institution | Universidade do Minho |
| instname_str | Universidade do Minho |
| language | eng |
| network_acronym_str | rum |
| network_name_str | RepositóriUM - Universidade do Minho |
| oai_identifier_str | oai:repositorium.uminho.pt:1822/11993 |
| organization_str_mv | urn:organizationAcronym:repositorium |
| person_str_mv | Conraria, Luís Aguiar Wen, Yi |
| publishDate | 2011 |
| publisher.none.fl_str_mv | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
| reponame_str | RepositóriUM - Universidade do Minho |
| repository_id_str | urn:repositoryAcronym:rum |
| service_str_mv | urn:repositoryAcronym:rum |
| spelling | engUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)porAguiar-Conraria and Wen (2008) argued that dependence on foreign oil raises the likelihood of equilibrium indeterminacy (economic instability) for oil importing countries. We argue that this relation is more subtle. The endogenous choices of prices and quantities by a cartel of oil exporters, such as the OPEC, can affect the directions of the changes in the likelihood of equilibrium indeterminacy. We show that fluctuations driven by self-fulfilling expectations under oil shocks are easier to occur if the cartel sets the price of oil, but the result is reversed if the cartel sets the quantity of production. These results offer a potentially interesting explanation for the decline in economic volatility (i.e., the Great Moderation) in oil importing countries since the mid-1980s when the OPEC cartel changed its market strategies from setting prices to setting quantities, despite the fact that oil prices are far more volatile today than they were 30 years ago.application/pdfporOPEC´s oil exporting strategy and macroeconomic (in) stabilityConraria, Luís AguiarWen, YiHostingInstitutionOrganizationalUniversidade do Minhoe-mailmailto:repositorium@usdb.uminho.ptrepositorium@usdb.uminho.pt2011-03-28T14:33:26Z2011-032011-03-01T00:00:00ZHandlehttps://hdl.handle.net/1822/11993http://purl.org/coar/access_right/c_abf2open accessEquilibrium indeterminacyOilOPEC strategyGreat moderation312891 bytesother research producthttp://purl.org/coar/resource_type/c_8042working paperhttp://purl.org/coar/access_right/c_abf2application/pdffulltexthttps://prod-dspace.uminho.pt/bitstreams/be85fcb1-30e6-4b60-9d9f-bfd827b254ce/download |
| spellingShingle | OPEC´s oil exporting strategy and macroeconomic (in) stability Conraria, Luís Aguiar Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| status | SINGLETON |
| subject.fl_str_mv | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| title | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| title_full | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| title_fullStr | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| title_full_unstemmed | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| title_short | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| title_sort | OPEC´s oil exporting strategy and macroeconomic (in) stability |
| topic | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| topic_facet | Equilibrium indeterminacy Oil OPEC strategy Great moderation |
| url | https://hdl.handle.net/1822/11993 |
| visible | 1 |