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The Effects of Oil Price Shocks on Economic Growth of Oil Exporting Countries: A Case of Six OPEC Economies

Author

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  • Monesa

    (Institute of Management Sciences, Peshawar)

  • Laila Taskeen Qazi

    (Institute of Management Sciences, Peshawar)

Abstract

The main objective of this study is to empirically investigate the effects of oil price shocks on economic growth of oil exporting countries. This research examines the impacts of oil price shocks on GDP growth, inflation, investment and the exchange rate of six OPEC economies using annual data from 1980 to 2013. The study uses Augmented Dickey Fuller (ADF) to establish Stationarity of the time series and applies Vector Autoregressive (VARX) model with Ordinary Least Squares (OLS) model to estimate the effects of oil price shocks on economic growth of the six OPEC countries during the research period. The results of the study indicates a statistically significant negative impact of oil shock on GDP growth of Algeria, a statistically significant positive impact of oil price shock on GDP growth of Venezuela, a statistically significant positive impact of oil shock on inflation rate of Iran and a statistically significant negative impact of oil shock on inflation rate of Venezuela, whereas, results for rest of the variables and countries were found statistically insignificant.

Suggested Citation

  • Monesa & Laila Taskeen Qazi, 2013. "The Effects of Oil Price Shocks on Economic Growth of Oil Exporting Countries: A Case of Six OPEC Economies," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 5(1), pages 65-87, April.
    • Handle: RePEc:bec:imsber:v:5:y:2013:i:1:p:65-87
    DOI: dx.doi.org/10.22547/BER/5.1.5
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    References listed on IDEAS

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    1. Mohammad Taghi Khosravi Larijani & Abbas Rezazadeh Karsalari & Mehdi Aghaee, 2013. "The Effects of Oil Price Shocks on real GDP in Iran," Hyperion Economic Journal, Faculty of Economic Sciences, Hyperion University of Bucharest, Romania, vol. 1(3), pages 18-29, September.
    2. Lorde, Troy & Jackman, Mahalia & Thomas, Chrystol, 2009. "The macroeconomic effects of oil price fluctuations on a small open oil-producing country: The case of Trinidad and Tobago," Energy Policy, Elsevier, vol. 37(7), pages 2708-2716, July.
    3. Farzanegan, Mohammad Reza & Markwardt, Gunther, 2009. "The effects of oil price shocks on the Iranian economy," Energy Economics, Elsevier, vol. 31(1), pages 134-151, January.
    4. Mehrara, Mohsen, 2008. "The asymmetric relationship between oil revenues and economic activities: The case of oil-exporting countries," Energy Policy, Elsevier, vol. 36(3), pages 1164-1168, March.
    5. Mork, Knut Anton, 1989. "Oil and Macroeconomy When Prices Go Up and Down: An Extension of Hamilton's Results," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 740-744, June.
    6. Rebeca Jimenez-Rodriguez & Marcelo Sanchez, 2005. "Oil price shocks and real GDP growth: empirical evidence for some OECD countries," Applied Economics, Taylor & Francis Journals, vol. 37(2), pages 201-228.
    7. M. Hakan Berument & Nildag Basak Ceylan & Nukhet Dogan, 2010. "The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 149-176.
    8. repec:bla:opecrv:v:34:y:2010:i:1:p:1-14 is not listed on IDEAS
    9. Omar Mendoza & David Vera, 2010. "The Asymmetric Effects of Oil Shocks on an Oil-exporting Economy," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 47(135), pages 3-13.
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    Cited by:

    1. Salim Bagadeem, 2023. "Oil Volatility and Economic Growth: Evidences from Top Oil Trading Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 381-387, November.
    2. Obayelu, Abiodun & Ogunmola, Omotoso & Obayelu, Oluwakemi & Adeyemi, Oluwatosin, 2021. "Crude Oil Price Shocks and Food Production Output in Oil Producing and Exporting Countries: The Case Study of Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315394, International Association of Agricultural Economists.
    3. Faiez Ahmed Elneel & Abdullah Fahad AlMulhim‎, 2022. "The Effect of Oil Price Shocks on Saudi Arabia’s Economic Growth in the Light of Vision 2030 “A Combination of VECM and ARDL Models”," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3401-3423, December.
    4. Clovis Wendji Miamo & Elvis Dze Achuo, 2022. "Can the resource curse be avoided? An empirical examination of the nexus between crude oil price and economic growth," SN Business & Economics, Springer, vol. 2(1), pages 1-23, January.

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    More about this item

    Keywords

    Oil prices shock; OPEC; GDP; OLS;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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