Reverse globalization: Does high oil price volatility discourage international trade?

Chen, Shiu-Sheng; Hsu, Kai-Wei

Reverse globalization: Does high oil price volatility discourage international trade?

2012

Chen, Shiu-Sheng | Hsu, Kai-Wei

This paper examines whether higher oil price volatility causes a reversal in globalization. Using a large annual panel data set covering 84 countries all over the world from 1984 to 2008, we investigate the impacts of oil price fluctuations on international trade, namely exports and imports. We present strong and robust evidence that international trade flows will be lower when oil prices fluctuate significantly. We therefore conclude that oil price volatility hurts globalization.

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