The Global Benefits of Low Oil Prices: More Than Meets the EyeRobert Fay, Justin-Damien Guenette and Louis Morel Staff Analytical Notes from Bank of Canada Abstract: Between mid-2014 and early 2016, oil prices fell by roughly 65 per cent. This note documents the channels through which this oil price decline is expected to affect the global economy. One important and immediate channel is through higher expenditures, especially in net oil-importing countries. Although there is considerable uncertainty over the estimated impact, to date, these expenditures appear to have been small, because the response of investment in oil-producing countries has been negative, large and quick to materialize. This negative response has dominated the positive response of expenditures in oil-importing countries. It is also important, however, to consider how the oil price decline can improve private and public sector balance sheets, as it is expected to support private and public spending in future years. To this extent, global benefits go beyond what is captured in current GDP measures and, as such, there is more to this issue than meets the eye. Keywords: Business fluctuations and cycles; International topics; Recent economic and financial developments (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:16-13 Access Statistics for this paper More papers in Staff Analytical Notes from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC. |
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