The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2012, April. Volume: 9 - Issue: 1

Oil Price Shock and Structural Changes in CMEA Trade: Pouring Oil on Troubled Waters?

by Elisabeth Beckmann ; Jarko Fidrmuc

Start page: 31 - End page: 49

Keywords: Trade, oil price, gravity models, structural breaks

Jel code: F14; C22; N74

Abstract:

We analyse trade between countries of the Council of Mutual Economic Assistance in Eastern Europe between 1950 and 1990. Despite central planning of the CMEA, we show that trade could be explained by standard demand factors surprisingly well. We document that the oil price crisis had several repercussions on Eastern Europe. The Soviet Union as a supplier of crude oil benefited from the energy crisis in the 1970s. By contrast, the individual CMEA countries in Central Europe did not enjoy improved terms of trade with the rest of the world and the CMEA as a whole responded to the oil crisis by intensifying intra-CMEA trade and turning inwards

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