• The Journal of the Convergence on Culture Technology
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• v.4 no.3
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• pp.93-98
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• 2018

The article studies macroeconomic effects of the oil shock for Korea, which is a representative emerging economy of Asia and a small open economy. This article analyzed the macroeconomic effects of oil shocks in terms of demand and supply. In the case of Korea, oil price shocks different responds depending on factors of shock. Oil supply shock have led to a decline in industrial activity and interest rate, and oil specific demand shock have shown the greatest increase in interest rate relative to other oil price shocks. In addition, oil demand shock driven by economic activity showed that the comsumer price and the exchange rate are the largest compared to the oil shock caused by other factors. Therefore, policy makers will need to identify the source of the oil shock.