Politics and Economics (CGU), Politics (Scripps)
Economic Policy | Economics | International and Area Studies | International Economics | Political Economy
Recycling of petrodollars refers to what becomes of revenues earned by oil-exporting countries, particularly after major oil price shocks. Countries may spend some portion on foreign goods and services, but typically the increases in oil revenues following price shocks have been so large that oil exporters have been unable to absorb these petrodollars into their domestic economies either through consumption or through investment. Instead, petrodollars usually get recycled in the form of foreign asset savings held abroad. Such foreign assets may range from deposits held in foreign banks to bonds and private equity.
© 2009 Princeton University Press
Neiman Auerbach, Nancy; Willett, Thomas D. “Petrodollars,” Princeton Encyclopedia of the World Economy, Princeton University Press, 2009.