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The Oil Price and Trade Nexus in the Gulf Co-Operation Council Countries

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  • Tarek Tawfik Yousef Alkhateeb

    (College of Business Administration, Prince Sattam bin Abdulaziz University, 173, Alkharj 11942, Saudi Arabia
    Department of Agriculture Economics, Kafr Elshiekh University, Kafr Elshiekh 33511, Egypt)

  • Haider Mahmood

    (College of Business Administration, Prince Sattam bin Abdulaziz University, 173, Alkharj 11942, Saudi Arabia)

Abstract

The present study investigates the asymmetrical impacts of oil prices and real exchange rates on the trade balances in the Gulf Co-operation Council countries. Using panel estimates, we found the symmetrical positive effect from the oil prices and the asymmetrical positive effect from the real exchange rates on the trade balances. For country-specific results, increasing oil prices showed a positive effect on the trade balances in Oman, Saudi Arabia, and the UAE and a negative effect in Kuwait. Decreasing oil prices carried a positive relationship with the trade balances in Bahrain, Oman, Qatar, and the UAE. The oil prices showed an asymmetrical impact on the trade balances in all countries, except Saudi Arabia. Moreover, the depreciation helped to improve the trade balances in Bahrain, Oman, Qatar, and the UAE. The appreciation worsened the trade balances in Oman, the UAE, and Saudi Arabia and improved the trade balance in Kuwait. Moreover, the asymmetrical relationships between the real exchange rates and the trade balances were corroborated in all of the investigated countries.

Suggested Citation

  • Tarek Tawfik Yousef Alkhateeb & Haider Mahmood, 2020. "The Oil Price and Trade Nexus in the Gulf Co-Operation Council Countries," Resources, MDPI, vol. 9(12), pages 1-19, November.
    • Handle: RePEc:gam:jresou:v:9:y:2020:i:12:p:139-:d:450372
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