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Econometric Analysis of Effect of Oil Price Change, Trade Balance and Other Variables on Inflation

Author

Listed:
  • Serikbay Ydyrys

    (Department of Economics and Finance, Akhmet Yassawi International Kazakh-Turkish University, Turkistan, Kazakhstan)

  • Malika Munasipova

    (Department of Economics and Finance, Akhmet Yassawi International Kazakh-Turkish University, Turkistan, Kazakhstan)

  • Kanat Ydyrys

    (Department of International Relations, Akhmet Yassawi International Kazakh-Turkish University, Turkistan, Kazakhstan)

  • Mariyam Ydyrys

    (Graduate School of Public Policy, Nazarbayev University, Turkistan, Kazakhstan,)

  • Lyazzat Mukhambetova

    (Kazakh University of Economics, Finance and International Trade, Turkistan, Kazakhstan,)

  • Guldana Temirbayeva

    (Department of Management, Akhmet Yassawi International Kazakh-Turkish University, Turkistan, Kazakhstan.)

Abstract

In this paper, we study the impact of fluctuations in global oil prices on inflation. For the purpose of finding out the effect of oil price on inflation rate, we have compared the data for the US and Russia by controlling for exchange, interest and growth rates, imports and exports, and money supply. The analysis covers quarterly data for period between 1999Q1 and 2014Q4. OLS and FGLS models are used by estimating them with Newey-West standard errors. The expected statistically significant positive effect of oil price on inflation rate was observed only for the US. However, the estimated effect for Russia was negative, though it was statistically insignificant. For the US, we found that a 10 percent increase in global oil priceincreases domestic inflation by about 3 percentage point. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy.

Suggested Citation

  • Serikbay Ydyrys & Malika Munasipova & Kanat Ydyrys & Mariyam Ydyrys & Lyazzat Mukhambetova & Guldana Temirbayeva, 2018. "Econometric Analysis of Effect of Oil Price Change, Trade Balance and Other Variables on Inflation," International Journal of Energy Economics and Policy, Econjournals, vol. 8(4), pages 134-138.
    • Handle: RePEc:eco:journ2:2018-04-17
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    References listed on IDEAS

    as
    1. Castro, César & Jerez, Miguel & Barge-Gil, Andrés, 2016. "The deflationary effect of oil prices in the euro area," Energy Economics, Elsevier, vol. 56(C), pages 389-397.
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    4. Christopher J. Neely, 2015. "How Much Do Oil Prices Affect Inflation?," Economic Synopses, Federal Reserve Bank of St. Louis, issue 10.
    5. Vesna Karadzic, 2014. "A regression model of inflation in Montenegro," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 10(2), pages 103-110.
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    More about this item

    Keywords

    Econometric Analyses; Oil Price; Trade Balance; Inflation; USA; Russia;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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