02031cas a2200265 a 4500 AALejournalIMF015535 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513543154 1018-5941 BD-DhAAL BD-DhAAL Arezki, Rabah. News Shocks in Open Economies : Evidence from Giant Oil Discoveries / Rabah Arezki, Valerie Ramey, Liugang Sheng. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time. Mode of access: Internet Ramey, Valerie. Sheng, Liugang. IMF Working Papers; Working Paper ; No. 2015/209 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/209/001.2015.issue-209-en.xml IMF e-Library