First Meeting of the Working Party on
International Trade in Goods and Trade
in Services Statistics (WPTGS), Paris,
22-24 September 2008
Rising fuel prices and trade.
A macro-economic impact analysis for big
traders with a focus on Germany
by
Dr. Christian Lutz
Institute of Economic Structures Research (GWS)
gws
Gesellschaft für Wirtschaftliche Strukturforschung mbH
Heinrichstr. 30 ° D – 49080 Osnabrück, Germany
Tel.: + 49 (541) 40933-12 ° Fax: + 49 (541) 40933-11
Email: lutz @ gws-os.de ° Internet: www.gws-os.de
1.

Introduction: Oil price and GDP
Shock analysis

Vector autoregressive models:
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Structural econometric models
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
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GDP of oil-importing countries is negatively hit by oil price
shocks; Darby (1982), Hamilton (1983)
Effect is asymmetric; Mork (1989)
nonlinear estimations: better results
Lee et al. (1995), Hamilton (1996),
Jimenez-Rodriguez / Sanchez (2005)
GDP of oil importing countries is negatively hit by oil price
shocks (IEA 2004, EIA 2006)
differences between countries can be explained by structural
differences of their economies.
positive effects of rising GDP of oil exporting countries are not
easy to analyze. Accumulation of surplus stocks. (EIA 2006),
(Jimenez-Rodriguez/Sanchez 2005)
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Introduction: Oil price and GDP
6 transmission channels for oil importers
(Lardic and Mignos 2008)
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Reduction of potential output,
negative terms of trade effects,
increased money demand,
inflation including second round effects,
negative demand side impacts,
structural changes
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Introduction: Oil price and GDP

Contribution of the paper:

Effects of a permanent rise (surplus stocks neglected)
of the energy prices on a net energy importing country
(Germany) including the international trade effects
Three channels for trade effects:
 change of goods imports of energy exporters induce
goods exports of energy importers
 depending on the regional and the goods structure of
the exports of the importer

change of trade shares
 depending on the price impact for goods in all countries

change of goods imports of energy importers
 consumption to investment
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2.

GINFORS: Data Sources and Coverage
Data sources
model type
country models
trade
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data sources
OECD (BTD, 25 sectors,
Services)
global coverage
50 countries (> 95% of
world GDP, trade, energy
consumption)
UN COMTRADE
2 regions (OPEC, ROW)
OECD IO (41 sectors)
input-output
22 countries (more than
OECD STAN, SNA DT
and sector
80% of world GDP)
National sources (CN, TW)
macro
energy/CO2
OECD/IMF
IEA
52 countries
52 countries
material
population
SERI
UN
52 countries
52 countries
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GINFORS: Data Sources and Coverage

Country Coverage
country models
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OPEC ex. Indonesia
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3.
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GINFORS: Model Structure
Wheel of GINFORS: General architecture
LUM
MIM
MM
EEM
IOM
LUM
MIM
MM
EEM
IOM
Bilateral
Trade for 25
Goods &
Services
IOM
EEM
MM
MIM
LUM
IOM
EEM
MM
MIM
LUM
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GINFORS: Model Structure
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Country Model
Bilateral
Trade for 25
Goods &
Services
IOM
EEM
IOM
Input-Output-Model
EEM
Energy-Emission-Model
MM
Macro-Model
MIM
Material-Input-Model
LUM
Land-Use-Model
MM
MIM
LUM
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GINFORS: Model Structure
General architecture
input-output models
- final demand
- intermediate demand
- primary inputs
export
demand
import
prices
macro models
- balance of payment
- SNA totals
- budget of the government &
private sector
- labour market
energy-emission models
- final consumption
- transformation
- primary energy supply
- emissions
import
demand
export
prices
Bilateral multisector trade model
(25 sectors + services)
Bilateral multisector trade model
(25 sectors + services)

material models
land-use models
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GINFORS: Model Structure
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Trade model:
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Export of good i in country k explained by:
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Import price of good i explained by:
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Weighted average of the export for good i of all countries
Weights: Trade shares
Shares are automatically estimated for
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Share of country k in the imports of good i in all other
countries
Imports of good i in all other countries
price dependency
time trends
1994 - 2004
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4.
Scenarios
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Oil price 200 $/bbl (HEP) against 100 $/bbl in 2010 (baseline)
Coal and gas prices proportionally
Baseline
High energy price scenario
250
200
150
100
50
0
1991
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1995
2000
2010
2005
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2015
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5.
The results
Impacts on real GDP in 2010: HEP against baseline

OPEC
23,0%
Russia
8,3%
China -12,2%
Japan
-4,3%
UK
0,0%
Germany
-2,4%
USA
-15%
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-3,7%
-10%
-5%
0%
5%
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10%
15%
20%
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The results
Macroeconomic impacts in Germany – HEP against
baseline in %

2010
2015
2020
GDP Deflator
3,81
4,96
5,10
Consumption Prices (CPI)
6,43
7,34
7,13
Export Prices
9,86
11,81
11,20
Import Prices
22,96
23,19
19,25
Real GDP
-2,43
-0,39
0,37
Exports
1,48
2,13
2,45
Imports
-2,38
-0,78
0,90
Final consumption expenditure by households
-4,31
-2,76
-2,08
Gross fixed capital formation
-1,65
-0,32
0,30
Final consumption expenditure by government
-5,68
-3,73
-2,84
Components:
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The results

Impacts on industries in Germany – HEP against
baseline in %
(1) Agriculture
(2) Mining and Quarrying
(3) Food
(4) Textiles
(5) Wood
(6) Pulp, Paper
(7) Coke, Refined Petroleum Products
(8) Chemicals excl. Pharma
(9) Pharmaceuticals
(10) Rubber and Plastics
(11) Non-Metallic Minerals
(12) Iron & Steel
(13) Non-Ferrous Metals
(14) Metal Products
(15) Machinery and Equipment
(16) Office Machinery
(17) Electrical Machinery
(18) Radio, TV
(19) Medical, Precision and Optical Instruments
(20) Motor Vehicles
(21) Ships
(22) Aircraft
(23) Railroad
(24) Manufacturing Nec; Recycling
(25) Electricity, Gas, Water Supply
Total
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12,6
74,3
7,3
10,7
8,1
9,3
44,4
14,7
4,5
11,4
15,7
16,0
4,5
9,7
8,5
8,7
8,1
9,0
7,2
9,7
9,5
4,5
4,5
8,9
24,3
9,4
-3,3
-8,5
-2,4
-6,4
-0,5
-2,1
-5,5
-0,4
4,1
1,8
-0,9
0,4
-2,4
0,8
1,4
2,3
2,6
0,4
5,2
4,8
-2,5
-2,4
-2,4
2,0
0,5
-1,9
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12,6
66,3
7,3
10,7
8,1
9,3
44,4
14,7
4,5
11,4
15,7
16,0
4,5
9,7
8,5
8,7
8,1
9,0
7,2
9,7
9,5
4,5
4,5
8,9
24,3
9,9
15,5
74,3
15,2
13,6
11,4
15,5
68,9
27,2
12,6
19,4
28,5
22,9
10,5
19,8
16,1
19,8
19,0
18,0
14,2
15,2
15,1
13,3
17,4
19,2
15,8
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6.

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Conclusions
Energy importing countries may profit from higher
energy prices via international trade
The case of Germany:
 Improved terms of trade
 Shift from consumption to investment
 Additional exports of investment goods
 GDP reduction only in the short run negatively
 Consumers pay the bill
Further research is necessary for other countries
Impacts in a world of carbon or supply (peak oil)
constraints?
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