Estimation of crude oil import demand of OECD countries

Abstract

Crude oil is considerably the most important energy for world economy and most of all countries were affected by the crude oil price no matter they are played as the producers or consumers or both. Applying the data of 27 OECD countries from 1988 to 2013, this thesis conducts the import demand model to estimate the income elasticity and price elasticity for OECD together with the impact of financial crisis on 2008, the domestic crude oil production, the exchange rate, the population growth. The estimation of price elasticity for the whole region is -0.155 suggests that OECD is not sensitive with the increase in crude oil import price. Additionally, the income elasticity of whole region is 0.562 implies that income raise would lead to the increase in economic activities, so that the demand for crude oil increases. Finally, the impact of world financial crisis is confirmed in the estimation.