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The Relationship of Oil Prices and Economic Growthin Tunisia: A Vector Error Correction Model Analysis

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  • Amaira Bouzid

    (Faculty of Economic Sciences and Management of Tunis, El Manar University, Tunisia)

Abstract

This paper seeks to investigate the causal relationship between oil prices and economic growth in Tunisia over a period from 1960 to 2009. The empirical analysis starts by analyzing the time series properties of the data which is followed by examining the nature of causality among the variables. Tunisian is not oil producing rather oil-importing country. An increase in oil price decrease economic growth. The rising oil prices are the major concern for all the developing economies and Tunisian is suffering from it too. The increase in oil price has further effect the daily consumption pattern of households badly. This study analyzes that, how change in real crude oil price effects the real GDP of Tunisia negatively and many other factors differently. The results show that both series are integrated of order one (I(1)), the existence of a long-term relationship between energy prices and economic growth and Granger pairwise causality test revealed unidirectional causality from real GDP to oil prices.

Suggested Citation

  • Amaira Bouzid, 2012. "The Relationship of Oil Prices and Economic Growthin Tunisia: A Vector Error Correction Model Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(43), pages 3-22, March.
    • Handle: RePEc:rej:journl:v:15:y:2012:i:43:p:3-22
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    3. Peter Uchenna Okoye & Chinwendu Christopher Mbakwe & Evelyn Ndifreke Igbo, 2018. "Modeling the Construction Sector and Oil Prices toward the Growth of the Nigerian Economy: An Econometric Approach," Economies, MDPI, vol. 6(1), pages 1-19, March.
    4. Fatih Çemrek & Hüseyin Naci Bayraç, 2021. "The Econometric Analysis of the Relationship Between Oil Price, Economic Growth and Export In OPEC Countries," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 9(1), pages 111-124, June.
    5. Neville Francis & Sergio Restrepo-Angel, 2018. "Sectoral and aggregate response to oil price shocks in the Colombian economy: SVAR and Local Projections approach," Borradores de Economia 1055, Banco de la Republica de Colombia.
    6. Mohd Shahidan Shaari & Tan Lee Pei & Hafizah Abdul Rahim, 2013. "Effects of Oil Price Shocks on the Economic Sectors in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 360-366.
    7. Akif Musayev & Khatai Aliyev, 2017. "Modelling Oil-Sector Dependency of Tax Revenues in a Resource Rich Country: Evidence from Azerbaijan," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(3), pages 1023-1029.
    8. Bilal Mehmood & Zahid Irshad Younas & Amna Shahid, 2014. "Aviation Demand as Covariate of Economic Growth in Bangladesh: Cointegration Estimation and Causality Analysis," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(8), pages 301-307, August.
    9. N. P. Ravindra Deyshappriya & I. A. D. D. W. Rukshan & N. P. Dammika Padmakanthi, 2023. "Impact of Oil Price on Economic Growth of OECD Countries: A Dynamic Panel Data Analysis," Sustainability, MDPI, vol. 15(6), pages 1-14, March.
    10. Mohammad Aladwan & Mohammaad Almaharmeh & Husni Samara, 2023. "Modeling and Mediating the Interaction between Oil Prices and Economic Sectors Advancement: The Case of Middle East," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 51-60, March.
    11. Bilal Mehmood & Acleo Feliceo & Amna Shahid, 2014. "What Causes What? Aviation Demand And Economic Growth In Romania: Cointegration Estimation And Causality Analysis," Romanian Economic Business Review, Romanian-American University, vol. 9(1), pages 21-33, March.

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    More about this item

    Keywords

    Oil price; Economic Growth; Cointegration; Granger Causality and VECM;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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