IDEAS home Printed from https://ideas.repec.org/a/taf/jitecd/v29y2020i2p163-180.html
   My bibliography  Save this article

Asymmetrical relationship between oil price shocks and trade deficit: Evidence from Pakistan

Author

Listed:
  • Muhammad Ahad
  • Zaheer Anwer

Abstract

This study investigates the asymmetric impact of oil price shocks on trade deficit for Pakistan economy, using NonLinear ARDL analysis, over the period of 1990QI-2016QIV. The estimation results confirm the presence of nonlinearity in the series. The bound testing approach also establishes the existence of asymmetric relationship between trade deficit and oil price movements. We find that increase (decrease) in oil prices and wholesale prices and decrease (increase) in industrial product results in a significant increase (decrease) in trade deficit. The adjustment pattern, using dynamic multipliers, reveals that the new long-run equilibrium for oil prices can be archived after 1 year and 2 months, wholesale prices by 3 years and 8 months and for industrial growth in 6 years and 6 months. This paper has important policy implications for Pakistani decision-makers.

Suggested Citation

  • Muhammad Ahad & Zaheer Anwer, 2020. "Asymmetrical relationship between oil price shocks and trade deficit: Evidence from Pakistan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(2), pages 163-180, February.
    • Handle: RePEc:taf:jitecd:v:29:y:2020:i:2:p:163-180
    DOI: 10.1080/09638199.2019.1655782
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09638199.2019.1655782
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09638199.2019.1655782?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Oliver E. Ogbonna & Hyacinth E. Ichoku, 2022. "Oil Price, Exchange Rate and Asymmetric Adjustment of Nigeria's Bilateral Trade," Prague Economic Papers, Prague University of Economics and Business, vol. 2022(2), pages 195-213.
    3. Jungho Baek, 2023. "Oil Prices, World Trade Policy Uncertainty, and the Trade Balance: The Case of Korea," Commodities, MDPI, vol. 2(3), pages 1-13, June.
    4. Jungho Baek, 2022. "Not all oil shocks on the trade balance are alike: Empirical evidence from South Korea," Australian Economic Papers, Wiley Blackwell, vol. 61(2), pages 291-303, June.
    5. Baek, Jungho & Yoon, Jee Hee, 2023. "Shocks of crude oil prices and world trade policy uncertainty: How much do they matter for China’s trade balance with its three largest partners?," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 914-921.
    6. Balli, Esra & Nazif Çatık, Abdurrahman & Nugent, Jeffrey B., 2021. "Time-varying impact of oil shocks on trade balances: Evidence using the TVP-VAR model," Energy, Elsevier, vol. 217(C).
    7. Liurong Pan & Asad Amin & Nian Zhu & Abbas Ali Chandio & Eric Yaw Naminse & Aadil Hameed Shah, 2022. "Exploring the Asymmetrical Influence of Economic Growth, Oil Price, Consumer Price Index and Industrial Production on the Trade Deficit in China," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    8. Baek, Jungho, 2023. "A new look at the crude oil shocks and trade nexus: Evidence from bilateral trade between Korea and its three largest partners," Resources Policy, Elsevier, vol. 85(PA).
    9. Dahmani Mohamed Driouche & Attouchi Manel & Chenini Moussa & Benbouziane Mohamed, 2020. "Asymmetric Responses of Oil Price Shocks on Economic Growth in Algeria: An Empirical Analysis through NARDL Approach," Energy Economics Letters, Asian Economic and Social Society, vol. 7(2), pages 74-93, December.
    10. Tarek Tawfik Yousef Alkhateeb & Haider Mahmood, 2020. "Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses," Energies, MDPI, vol. 13(12), pages 1-13, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:29:y:2020:i:2:p:163-180. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJTE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.