The influence of oil price shocks on the Chilean, Colombian, and Brazilian macroeconomies

Abstract

This paper uses structural VAR models to analyze the influence of an unexpected increase in oil prices on the Chilean, Colombian, and Brazilian macroeconomies, with a focus on real gross domestic product and inflation rates. A pre-determined, positive shock to oil prices is followed by real economic contractions in the Chilean and Colombian economies. On the other hand, the Brazilian real economy remains unaffected over its fullsample and in its recent years as a net oil exporter, although it experiences recessionary effects during its years as a net oil importer. Chilean and Colombian core inflation and Brazilian headline inflation all increase. All responses occur in the short run only and are robust to changes in specification.