Asymmetric Effect of Oil Price on the Terms of Trade: Evidence from Oil Exporting and Importing Countries

The oil price shocks are an important source that affect on TOT in both oil exporting and importing countries. Hence, this paper compares the effects of real oil price shock on TOT in both oil importing and exporting countries, using Panel Data technique and during 1980-2010. To the best of our knowledge, we applied the nonlinear approach in order to assess the asymmetric impact of the oil price shocks on TOT. The results show that the oil price shocks influenced the TOT in the oil exporting and importing countries, differently. So that, in oil exporting countries, positive (negative) oil price shocks have significantly positive (negative) effect on their TOT, while in oil importing countries, positive (negative) oil price shocks have significantly a negative (positive) effect on TOT. Furthermore, the findings reveal that in the oil exporting countries, the effect of negative oil price shocks on TOT is more than positive oil price shocks. While, in oil importing countries, it is converse.