The Effects of Commodities Disturbances on Open Economies

Richard Whittaker, Florida International University

Abstract

This dissertation investigates the effects of commodity disturbances on underlying economies. The analysis conducted in this dissertation comprises of two main themes. The first is investigating which commodity disturbances affect a country's GDP. I examine twenty three OECD countries and nineteen primary commodities in the energy, metal, food and timber sectors using a New Keynesian model that was estimated using the DSGE method. It was found the oil disturbances and to a lesser extend natural gas were the only commodity disturbances that affect a country's GDP. Also, it was found that a country's openness plays an important role in shaping the response to these shocks. The second theme expands on these findings by analyzing the effects of oil and gas disturbances on Trinidad and Tobago by asking (1) How long are the effects from oil and gas disturbances on the economy? (2) How do the long-run effects from oil and gas disturbances differ within the economy? VECM and SVEC methods were used, and the results show that the effects from an oil disturbance are larger in magnitude and duration when compared to a gas disturbance. In addition, the effects of oil and gas disturbances had opposite movements on Trinidad and Tobago's CPI, interest rate, and narrow money velocity, whereas both disturbances were positively correlated in regards to Trinidad and Tobago's output and effective real exchange rate in the long-run.^

Subject Area

Economics|Finance

Recommended Citation

Whittaker, Richard, "The Effects of Commodities Disturbances on Open Economies" (2017). ProQuest ETD Collection for FIU. AAI10744823.
https://digitalcommons.fiu.edu/dissertations/AAI10744823

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