Energy Dependence and Oil Shocks: An Empirical Analysis of Macroeconomic Transmission in Haiti
- The exchange rate is the dominant, most robust transmission channel: an oil shock persistently depreciates the gourde, contracts real activity, and erodes foreign exchange reserves.
- Pass-through to domestic prices is dampened short-term by administered pump-price mechanisms, at the cost of delayed fiscal strain.
- An Iran-U.S.-conflict escalation scenario could raise Haiti's oil import bill by roughly 50 percent over six months.
- 5 percent of the contemporaneous inflation response to an oil shock transmits through gourde depreciation.
- The exchange-rate response to oil shocks strengthened markedly after 2019, consistent with rising structural vulnerability (reserve erosion, faster depreciation, political crises).
The paper conducts two complementary exercises. The first, based on an error-correction model estimated on 2000-2024 monthly data, establishes a near-proportional transmission between crude prices and imported refined products, and simulates the impact on Haiti's oil bill under three price scenarios: an escalation scenario modeled on the Iran-U.S. conflict could raise the oil import bill by roughly 50 percent over six months. The second, the paper's analytical core, applies Jordà local projections with external identification of OPEC supply-news shocks (Känzig 2021) to trace dynamic effects on inflation, the exchange rate, the trade balance, real GDP, and reserves.
The exchange rate response is the most robust result, surviving every specification tested, including weighting by conditional (GARCH) inflation variance; a decomposition shows 54.5 percent of the contemporaneous inflation response transmits through gourde depreciation. Splitting the sample shows the exchange-rate response to oil shocks was mild and even briefly negative in 2014-2018 but strongly positive and significant in 2019-2025, consistent with a structural rise in vulnerability since 2019 (reserve erosion, faster depreciation, political crises).
The authors recommend prioritizing foreign-exchange market surveillance over direct inflation targeting when facing oil shocks, making pump-price adjustments more gradual and predictable, and integrating energy-stress scenarios into monetary policy and macroprudential surveillance.
How to cite
Bank of the Republic of Haiti (BRH), 2026, Energy Dependence and Oil Shocks: An Empirical Analysis of Macroeconomic Transmission in Haiti, https://www.brh.ht/wp-content/uploads/DREF_Working-Paper-WP_2026_2_Dependance-energetique-et-chocs-petroliers_mai-2026.pdf