July 14, 2015

Global Implications of Lower Oil Prices

The sharp drop in oil prices is one of the most important global economic developments over the past year. In a new report that I co-authored, we find that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.

Here is an interview on the report with one of my co-author, Aasim Husain and here is a podcast on the report as well.