The U.S. Dollar Exchange Rate and the Demand for Oil

34 Pages Posted: 28 Feb 2013  

Selien De Schryder

Ghent University-Universiteit Gent - Department of Financial Economics

Gert Peersman

Ghent University-Universiteit Gent - Department of Financial Economics

Date Written: February 27, 2013

Abstract

Using recent advances in panel data estimation techniques, we find that an appreciation of the US dollar exchange rate leads to a significant decline in oil demand for a sample of 65 oil-importing countries. The estimated effect turns out to be much larger than the impact of a shift in the global crude oil price expressed in US dollar. Furthermore, the effect of the US dollar on oil demand tends to be declining over time and, for a subsample of OECD countries, stronger for an appreciation compared to a depreciation of the US dollar.

Keywords: oil demand, US dollar exchange rate, panel data, nonlinearities

JEL Classification: C330, F310, Q410

Suggested Citation

De Schryder, Selien and Peersman, Gert, The U.S. Dollar Exchange Rate and the Demand for Oil (February 27, 2013). CESifo Working Paper Series No. 4126. Available at SSRN: https://ssrn.com/abstract=2225635

Selien De Schryder

Ghent University-Universiteit Gent - Department of Financial Economics ( email )

Ghent, 9000
Belgium

Gert Peersman (Contact Author)

Ghent University-Universiteit Gent - Department of Financial Economics ( email )

W. Wilsonplein 5D
Ghent, 9000
Belgium
+3292643514 (Phone)

HOME PAGE: www.feb.ugent.be/fineco/gert.html

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