Comparative Study of Macroeconomic Effects of Oil Shocks, before and after Mid 80s: The Case of Oil Exporting Countries

Oil shocks have always had different effects on the oil exporting and importing countries. It seems that these effects have modified during the last four decades. In other words, the effects of the oil shocks of 1970s on the industrialized economies of the oil importing countries have been mostly followed by an overwhelming stagflation, although such severe effects have not appeared after the oil shocks of 1990s. In this paper, with the use of Autoregressive (VAR) model, the attempt is to investigate the critical effects of oil shocks on some oil exporting countries like Iran, Venezuela, Nigeria, Norway and Canada. Based on impulse response functions in these countries, we will arrive at the conclusion that just in Norway and Canada, the effects of oil shocks on growth rate, inflation and real exchange rate have been decreased. In this case, the paper will argue that the role of exchange rate systems, monetary policies and different macroeconomic structure of these countries have caused milder effects of oil shocks in 1990s.