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The Impact of Oil Prices on the G7¡¯s Inflation Rate: An Econometric Study for the Period (1986-2016)

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  • Hmood Humaidi Banikhalid

Abstract

The study aims at determining the impact of oil prices on the G7 inflation rate, and examining the nature of that impact, whether negative or positive, if existed, during the period from November 1986 to October 2016. The study found that there is a statically significant impact of the oil prices on the G7 inflation rate, and that the relationship between the two variables is not linear: the rate of inflation is affected by oil pricesat price levels below (34.5)$ per barrel negatively. And after this level, the relationship turns positive.

Suggested Citation

  • Hmood Humaidi Banikhalid, 2017. "The Impact of Oil Prices on the G7¡¯s Inflation Rate: An Econometric Study for the Period (1986-2016)," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(6), pages 167-173, June.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:6:p:167-173
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    References listed on IDEAS

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    2. LeBlanc, Michael & Chinn, Menzie David, 2004. "Do High Oil Prices Presage Inflation? The Evidence from G-5 Countries," Santa Cruz Department of Economics, Working Paper Series qt4wt4m7hg, Department of Economics, UC Santa Cruz.
    3. Hem C. Basnet & Kamal P. Upadhyaya, 2015. "Impact of oil price shocks on output, inflation and the real exchange rate: evidence from selected ASEAN countries," Applied Economics, Taylor & Francis Journals, vol. 47(29), pages 3078-3091, June.
    4. Juthathip Jongwanich & Donghyun Park, 2011. "Inflation in developing Asia: pass‐through from global food and oil price shocks," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 25(1), pages 79-92, May.
    5. Adam, P. & Rianse, U. & Harafah, Ĺ. M. & Cahyono, E. & Rafiy, M., 2016. "A Model of the Dynamics of the Effect of World Crude Oil Price and World Rice Price on Indonesia’s Inflation Rate," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(1), pages 1-10, March.
    6. Mohammed Mahmoud Mantai & Fardous Alom, 2016. "Impacts of oil price, exchange rate and inflation on the economic activity of Malaysia," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 40(2), pages 180-191, June.
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    Cited by:

    1. Kia, Amir & Jafari, Mahboubeh, 2020. "Forward-looking agents and inflation in an oil-producing country: Evidence from Iran," Journal of Asian Economics, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    Inflation rate; G7; Oil prices;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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