Petrodollars and Imports of Oil Exporting Countries

38 Pages Posted: 6 Mar 2009

See all articles by Roland Beck

Roland Beck

European Central Bank (ECB)

Annette Kamps

Kiel Institute for the World Economy

Date Written: February 27, 2009

Abstract

This paper investigates the empirical determinants of import demand in oil exporting countries. Using a new dataset including a large cross section of oil exporting countries, we show with a panel cointegration analysis that import demand in these countries depends positively on domestic demand and exports, the real exchange rate and the price of oil. Fiscal surpluses, on the other hand, tend to reduce the demand for imports. More specifically, our import elasticities estimated for oil exporting countries are not far from estimates found in the literature on industrial countries. In particular, we conclude that the import elasticity with respect to domestic activity is larger than one - a finding which is in contrast to standard theoretical predictions but in line with most empirical findings for other countries. These results are robust over a wide set of alternative specifications.

Keywords: Import Equation, Oil Exporting Countries, Panel Cointegration

JEL Classification: F14, F01, Q43

Suggested Citation

Beck, Roland and Kamps, Annette, Petrodollars and Imports of Oil Exporting Countries (February 27, 2009). ECB Working Paper No. 1012, Available at SSRN: https://ssrn.com/abstract=1333572

Roland Beck (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Annette Kamps

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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