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Article

Impact of Structural Oil Price Shock Factors on the Gasoline Market and Macroeconomy in South Korea

Department of Economics, Dankook University, Yongin-si, Gyeonggi-do 16890, Korea
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Author to whom correspondence should be addressed.
Academic Editor: Jinsoo Kim
Sustainability 2021, 13(4), 2209; https://doi.org/10.3390/su13042209
Received: 28 January 2021 / Revised: 11 February 2021 / Accepted: 14 February 2021 / Published: 18 February 2021
(This article belongs to the Special Issue Towards Sustainability: Energy and Carbon Efficiency)
This study decomposed shocks of the global crude oil (GCO) market and Korean gasoline (KG) market into six types using the structural vector auto-regressive model. Breaking down the shocks into six, we analyzed how each shock affects the macroeconomy and gasoline market in Korea. Results of the analysis revealed that the oil supply shock did not cause a large fluctuation in gasoline prices, but it harmed the macroeconomy. By contrast, the two shocks on the demand side of the GCO market caused a large increase in domestic gasoline prices, but they did not negatively affect the macroeconomy. Meanwhile, in the KG market, gasoline-refining shock and gasoline demand shock caused a significant increase in gasoline prices. Both shocks had some negative effects on the Korean macroeconomy at a certain point, but the effects are not as strong as the oil supply shock. However, the gasoline distribution shock in Korea rarely caused negative consequences for major macroeconomic variables. Moreover, analyzing the KG prices through historical decomposition, we found that the two demand-side factors of the GCO market and the demand shock of the KG market have had the most important influence on the gasoline price since the 2000s. From the analysis, the increase in gasoline prices in Korea since the 2000s can be inferred to have no significant negative impact on the macroeconomy. Therefore, the essential factors of price fluctuations must be focused on in analyzing domestic gasoline price and their impact on the macroeconomy. View Full-Text
Keywords: oil price shock; global crude oil market; Korean gasoline market; Korean macroeconomy; SVAR oil price shock; global crude oil market; Korean gasoline market; Korean macroeconomy; SVAR
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MDPI and ACS Style

Lee, J.; Cho, H.C. Impact of Structural Oil Price Shock Factors on the Gasoline Market and Macroeconomy in South Korea. Sustainability 2021, 13, 2209. https://doi.org/10.3390/su13042209

AMA Style

Lee J, Cho HC. Impact of Structural Oil Price Shock Factors on the Gasoline Market and Macroeconomy in South Korea. Sustainability. 2021; 13(4):2209. https://doi.org/10.3390/su13042209

Chicago/Turabian Style

Lee, Jihoon, and Hong C. Cho 2021. "Impact of Structural Oil Price Shock Factors on the Gasoline Market and Macroeconomy in South Korea" Sustainability 13, no. 4: 2209. https://doi.org/10.3390/su13042209

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