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Exchange Rate Volatility and Oil Prices Shocks

Author

Listed:
  • Khuram Shafi
  • Liu Hua
  • Zahra Idrees
  • Javed Altaf Satti
  • Amna Nazeer

Abstract

Consumption is positively correlated with disposable income, due to higher oil prices a fall in disposable income will decreases consumption and production and adverse impact on growth. If investment decisions are concerned increase in oil prices will increase cost of production and lowers profit margin and investment. This paper seeks to identify the impact of exchange rate volatility and oil prices fluctuations on economic growth in France based on annual data for fourty years. Impact of oil prices and exchange rate volatility on economic growth has been significant. Cointegration technique is applied to check exchange rate volatility has been significant. Engle and Granger cointegration technique applied and the impact of oil prices and exchange rate volatility on economic growth is checked. Engle Granger results indicate that relationship is significant in the long run and its error correction adjustment mechanism (ECM) in short runs is significant and correctly signed for France.

Suggested Citation

  • Khuram Shafi & Liu Hua & Zahra Idrees & Javed Altaf Satti & Amna Nazeer, 2015. "Exchange Rate Volatility and Oil Prices Shocks," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(1), pages 249-256, January.
    • Handle: RePEc:hur:ijarbs:v:5:y:2015:i:1:p:249-256
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    References listed on IDEAS

    as
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    3. Aliyu, Shehu Usman Rano, 2009. "Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation," MPRA Paper 16319, University Library of Munich, Germany, revised 10 Jun 2009.
    4. Hilde C. Bjørnland, 2009. "Oil Price Shocks And Stock Market Booms In An Oil Exporting Country," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(2), pages 232-254, May.
    5. Amano, R. A. & van Norden, S., 1998. "Oil prices and the rise and fall of the US real exchange rate," Journal of International Money and Finance, Elsevier, vol. 17(2), pages 299-316, April.
    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.
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    Citations

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    Cited by:

    1. Udabah, Sylvester & Okolo, Chimaobi, 2018. "Oil Price and Exchange Rate Volatilities: Its Implications on the Cost of Living in OPEC Member Country - Nigeria," MPRA Paper 86509, University Library of Munich, Germany.
    2. Chipeta Chama & Meyer Daniel Francois & Muzindutsi Paul-Francois, 2017. "The Effect of Exchange Rate Movements and Economic Growth on Job Creation," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(2), pages 20-41, August.
    3. Hussaini Umaru & Aguda Niyi A. & Nordiana Osagie Davies, 2018. "The Effects of Exchange Rate Volatility on Economic Growth of West African English-Speaking Countries," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(4), pages 131-143, October.
    4. Harold Ngalawa & Adebayo Augustine Kutu, 2017. "Modelling exchange rate variations and global shocks in Brazil," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 73-95.

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    More about this item

    Keywords

    Exchange rate; Imports; Exports; Economic Growth;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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