The impacts of oil price shocks on small oil-importing economies: Time series evidence for Liberia

Therefore, we argue that when oil price increases in Liberia, the high costs of reallocating resources from oil-intensive sectors lead to labor intensiveness; whose contribution to Liberian GDP by far exceeds that of oil. Hence, a general insight from the study is that where substitution possibilities exist, rising oil prices lead to high labor and capital intensity and could have off-setting effects depending on the contribution of these factors to GDP. Thus, falling oil price regimes in Liberia should witness policy measures aimed at boosting the service sector.