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Linking Historical Oil Price Volatility and Growth: Investment and Trade Dynamics

Author

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  • Olukorede Abiona

    (Department of Economics, University of Leicester, Astley Clarke Building, LE1 7RH, United Kingdom.)

Abstract

This paper investigates the impact of historical crude oil-price fluctuation on diverse economies. It employs the use of structural vector autoregressive (SVAR) and panel VAR methodologies as innovative paths of investigating oil-shock association. While evidence of linear and non-linear shock specifications hold for developed economies within the SVAR specification, growth patterns for emerging counterpart are only defined by the linear shock. The asymmetric behaviour of growth response along shock specifications and development is predisposed to two main channels: First is the differential systemic and institutional framework in place across economies, making shock vulnerabilities differ. Secondly, identification restrictions imposed within SVAR methodology is perceived to have overruled conditions consistent with the non-linear shock model. Positive oil-price shocks benefits accrue to the global community through investment while negative oil-price shocks are transmitted through interest rate triggered trade cut-backs.

Suggested Citation

  • Olukorede Abiona, 2015. "Linking Historical Oil Price Volatility and Growth: Investment and Trade Dynamics," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 598-611.
    • Handle: RePEc:eco:journ2:2015-02-25
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Oil-price Volatility; Asymmetric Growth; Structural Vector Autoregressive; Panel VAR Methodology; Trade; Investment;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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