External Capital Structures and Oil Price Volatility

John D. Burger, Alessandro Rebucci, Francis E. Warnock, Veronica Cacdac Warnock

NBER Working Paper No. 16052
Issued in June 2010
NBER Program(s):   IFM

We assess the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. We study two Caribbean economies highly vulnerable to oil price shocks, an oil-importer (Jamaica) and an oil-exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. We find that both countries could alter their international portfolio to provide a more effective buffer against such shocks.

Published: Burger, J., A. Rebucci, F. Warnock, and V. Warnock, 2010. External Capital Structures and Oil Price Volatility. Journal of Business, Finance and Economics in Emerging Economies. 5(2): 1-37.

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Acknowledgments

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