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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/17713| Title: | Crude Oil Price Fluctuations and Saudi Arabian Behaviour |
| Keywords: | Q40 D58 F13 ddc:330 Crude oil prices OPEC countries export quota computable general equilibrium Erdölpreis Volatilität Mineralölmarkt Mehr-Sektoren-Modell Allgemeines Gleichgewicht Außenhandelskontingent Marktmacht Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | Kiel Institute for the World Economy (IfW) Kiel |
| Description: | This study seeks to explain why crude oil prices fluctuate, the main cause being the quota regime, which characterises the OPEC agreements. Given that the Saudi oil supply is inelastic in the short term, a shock in the oil market is accommodated by an immediate price change. In contrast, a dominant firm behaviour in the long term causes an output change, which is accompanied by a smaller price change. This explains why oil prices overshoot. The results of a general equilibrium model applied to Saudi Arabia support this analysis. They also indicate that Saudi Arabia does not have any incentive in altering the crude oil market equilibrium with either positive or negative supply shocks; and that its behaviour is asymmetric in the presence of world demand shocks, having an incentive (disincentive) in intervening if a negative (positive) demand shock hits the crude oil market. A second set of simulations is designed to understand what might be a correct OECD policy to lower prices. A tax cut would worsen the situation, whereas policies which can increase the price elasticity of demand seem to be very effective. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/17713 |
| Other Identifiers: | http://hdl.handle.net/10419/17713 ppn:322721873 |
| Appears in Collections: | EconStor |
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