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Impact of Crude Oil Price Changes on Household Consumption Expenditure in Oman (1990 -2016)

Author

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  • Abubakar El-Sidig A.A Mahdi

    (Al-Buraimi University College � Sultanate of Oman Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - The preceding three years (2014, 2015, and 2016) saw a drop in the price of oil which has impacted all parts of Omani macroeconomic life. This study aims to identify the association between oil price changes and aggregate household consumption expenditure in the Sultanate by analyzing the long term relationship between the variables of interest. Methodology/Technique - The (ARDL) Autoregressive Distributed Lag bound test of co- integration is used with 27 annual observations obtained between 1990 and 2016. Finding - The statistical results show that there is a long term, positive relationship between the two variables. Novelty � As Oman is heavily dependent on oil, any fluctuation in the price of oil will undoubtedly cause instability in the economy (macroeconomic variables) demonstrating the presence of a robust correlation between consumption and oil prices. The bound test of the ARDL approach demonstrates this relationship. This study is therefore useful for Muscat officials to identify ways to reduce the dependency on oil.

Suggested Citation

  • Abubakar El-Sidig A.A Mahdi, 2019. "Impact of Crude Oil Price Changes on Household Consumption Expenditure in Oman (1990 -2016)," GATR Journals jber175, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jber175
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    References listed on IDEAS

    as
    1. Christiane Baumeister & Lutz Kilian, 2016. "Lower Oil Prices and the U.S. Economy: Is This Time Different?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(2 (Fall)), pages 287-357.
    2. Christiane Baumeister & Lutz Killian, 2016. "Lower Oil Prices and the U.S. Economy: Is This Time Different?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(2 (Fall)), pages 287-357.
    3. Chittedi, Krishnareddy, 2011. "Does oil price matter for Indian stock markets?," MPRA Paper 35334, University Library of Munich, Germany, revised 01 Dec 2011.
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    More about this item

    Keywords

    Total Household Consumption Expenditure; Crude Oil Price; Autoregressive Distributed Lag (ARDL); Omani Economy.;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D19 - Microeconomics - - Household Behavior - - - Other
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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