Energy Shocks and Current Account Balance: Evidence From Oil-Importing Economies

This paper examines the impact of renewable energy consumption and oil price shocks on the current account (CA) balance across 23 oil-importing economies. Employing a local projection model, results indicate that a positive renewable energy shock improves the CA, with significant effects occurring in the third and fourth years. In contrast, oil price shocks exert short- to medium-term negative effects. A further distinction between CA deficit and surplus economies reveals evidence of an immediate gain in deficit countries, while surplus economies display a gradual yet sustained CA improvement in response to renewable energy shocks.