Oil Price Shock

This paper quantifies and analyses the interrelationship between the economic activity (GDP) of each Spanish region in response to the variation in economic activity of the remaining regions and to oil price shocks. The regional GVAR model developed offers great potential for many lines of analysis and the monitoring and projection of regional economic activity.

The slump in oil and other commodity prices since mid-2014 is having an important impact on the current account balances (CAB) across the World. While the cyclical effects are already affecting the short-term financing needs of oil exporters in particular, the structural or permanent effects of the lower oil prices will affect countries’ structural balances as well.