Asymmetric Effect of the Oil Price in the Ecuadorian Economy

The purpose of this paper is to identify whether there is an asymmetric response of the output to positive and negative changes in the price of oil. We take the case of Ecuador, an oil exporter but also an importer of derivates of the same commodity. We implement the local projections methodology to estimate this asymmetric response through state-dependence impulse response function. The results evidence that the negative variations of oil price affect the Ecuadorian GPD more than when rise the price of this commodity. Also, we show that the persistence of effect is higher when the oil price fall than there are positive variations.

Keywords: Asymmetry, oil price, local projections, growth, Ecuador.