A new look at the crude oil shocks and trade nexus: Evidence from bilateral trade between Korea and its three largest partners

This article examines the impact of oil supply, global demand, and oil-specific demand shocks on Korea's exports to and imports from its three largest partners: China, the United States, and Japan. We also account for world trade uncertainty in our analysis. Our findings shed light on the complex dynamics of oil price shocks, high-lighting the importance of shock type, trading partners, and timing in determining their effects on Korea's trade. Moreover, we identify the significant role of world trade uncertainty in explaining short-term fluctuations in Korea's exports to its top three partners. These insights have substantial implications for trade modeling and policy analysis.