Transmission of Oil Price Fluctuations Through Trade Linkages

Abstract

Oil shocks have been one of the most important and controversial issues among economists in the past decades. The fact that a sudden and significant change in the world price of crude oil can disrupt the mechanism of the world economy became evident in the early 1970s with the occurrence of the world’s first major oil shock. This issue has become more complicated and requires a more detailed scientific investigation due to the spread of the Corona virus and Russia’s invasion of Ukraine. In this chapter of the book, the effects of oil shocks are discussed from a scientific point of view based on monetary policies. In this chapter of the book, the effects of oil shocks are discussed from a scientific point of view based on monetary policies. For this purpose, an attempt is made to look at this issue from a theoretical point of view and also with an empirical case study to examine this relationship in energy exporting countries and energy importing countries. The main points of this chapter’s talks showed that an increase in oil prices would directly increase the GDP growth rate of nations that export oil. A brilliant technique to manage the impact of the oil price on a country’s macroeconomic environment is to take suitable monetary policies into consideration.