英语论文网

Currencies would adjust to changes in trade balances. Higher oil prices would lead to a rise in the value of the US dollar, to the extent that oil exporters invest part of their windfall earnings in US dollar dominated assets and that transactions demand for dollars, in which oil is priced, increases. A stronger dollar would raise the cost of servicing the external debt of oil-importing developing countries, as that debt is usually denominated in dollars, exacerbating the economic damage caused by higher oil prices. It would also amplify the impact of higher oil prices in pushing up the oil-import bill at least in the short-term, given the relatively low price-elasticity of oil demand. Past oil shocks provoked debt-management crisis in many developing countries.

Fiscal imbalances in oil-importing countries caused by lower income would be exacerbated in those developing countries, like India and Indonesia that continue to provide direct subsidies on oil products to protect poor households and domestic industry. The burden of subsidies tends to grow as international prices rise, adding to the pressure on government budgets and increasing political and social tensions.

It is important to bear in mind the limitations of the simulations reported on above. In particular, the results do not take into account the secondary effects of higher oil prices on consumer and business confidence or possible changes in fiscal and monetary policies. The loss of business and consumer confidence resulting from an oil shock could lead to significant shifts in levels and patterns of investment, savings and spending. A loss of confidence and inappropriate policy responses, especially in the oil-importing countries, could amplify the economic effects in the medium term.

In addition, neither the OECD’s estimates for member countries nor the IMF’s estimates for the developing countries and transition economies take explicit account of the direct impact of higher oil prices on natural gas prices and the secondary impact on electricity prices, other than through the general rate of inflation. Higher oil prices would undoubtedly drive up the prices of other fuels, magnifying the overall macroeconomic impact.

Rising gas use worldwide will increase this impact. Nor does this analysis take into account the macroeconomic damage caused by more volatile oil prices. Short-term price volatility, which has worsened in recent years, complicates economic management and reduces the efficiency of capital allocation. Despite these factors, the results of the analysis presented here give an order-of-magnitude indication of the likely minimum economic repercussions of a sustained period of higher oil prices.

Conclusion

Oil prices remain a significant macroeconomic variable. Higher prices can still inflict substantial damage on the economies of oil-importing countries and on the global economy as a whole. The surge in prices in 1999-2000 contributed to the slowdown in global economic activity, international trade and investment in 2000- 2001.

The disappointing pace of recovery since then is at least partly due to rising oil prices: according to the modeling results, global GDP growth may have been at least half a percentage point higher in the last two or three years had prices remained at mid-2001 levels.

The results of the simulat