Does oil price shock affect small open economies? Evidence from Hong Kong, Singapore, South Korea and Taiwan

Abstract

We apply recursive VAR/VECM as well as panel data models to examine whether oil price shocks have any significant impacts upon the Asian small open economies. We found no significant impacts on Real Gross Domestic Product (RGDP), regardless of model specifications. However, we detected positive significant effects on unemployment after three time lags and significant contemporaneous effects on CPI in panel regressions contrary to previous studies.

Keywords:

• Real GDP
• unemployment
• oil price shocks
• VAR
• VECM
• panel data model
• Hong Kong
• Singapore
• South Korea
• Taiwan

JEL Classification:

• C53
• E32