Macroeconomic outcomes of OPEC and non-OPEC oil supply shocks in the euro area

Abstract

Exogenous OPEC and non-OPEC oil supply cuts, which are identified within an SVAR model with unplanned oil supply outage as an external instrument, decrease industrial production and raise unemployment rate in the euro area. However, the transmissions to consumer price are different when OPEC and non-OPEC oil supply cuts are respectively considered. Further analyses are implemented with datasets of different sectors and individual countries. The results are robust against different identification strategies and variations in empirical specifications. Finally, our findings signify policy implications for enhancing energy security in the European Union.