A Crude Shock: Explaining the Impact of the 2014-16 Oil Price Decline Across Exporters


Francesco Grigoli ; Alexander Herman ; Andrew J Swiston

Publication Date:

July 18, 2017

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.


The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative effects. We fi nd that pre-existing fundamentals account for about half of the cross-country variation in the impact of the shock. Oil exporters that weathered the shock better tended to have a stronger fi scal position, higher foreign currency liquidity buffers, a more diversifi ed export base, a history of price stability, and a more flexible exchange rate regime. Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in fi scal revenue or economic activity.


Working Paper No. 2017/160



Publication Date:

July 18, 2017



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