New Evidence from Oil Rent and Economic Growth in OPEC Countries: An Application of the Hybrid Model of Threshold Markov Switching Model

Sedaghat Kalmarzi, Haniyeh; Fattahi, Shahram; Sohaili, Kiomars

doi:10.22075/jem.2019.18089.1331

New Evidence from Oil Rent and Economic Growth in OPEC Countries: An Application of the Hybrid Model of Threshold Markov Switching Model

Document Type : Original Article

Authors

Haniyeh Sedaghat Kalmarzi ¹

Shahram Fattahi ²

Kiomars Sohaili ²

¹ Ph.D. Student, Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran

² Associate Professor, Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran

10.22075/jem.2019.18089.1331

Abstract

The relationship between oil and economic growth is one of the most important issues in the oil-exporting countries that the nature of the relationship is important for the economic policymakers of these countries. The purpose of this study was to examine the effects of oil rent on economic growth in OPEC countries during the period 1961-2017. For this purpose, using the new and hybrid threshold Markov switching model, the threshold effects of oil rent on economic growth regimes have been modeled. The results of the estimation of the research model indicate that oil rent has a nonlinear and threshold effect on economic growth regimes, so that as long as the share of oil rents in gross domestic product is less than 30.9% percent, oil rent has a positive effect on economic growth but after exceeding the threshold, oil rent has had a significant negative impact on economic growth. The results also show that economic growth in OPEC countries has two high and low growth regimes that the high-growth regime has lower durability than the low-growth regime.

Keywords

Oil Rent

Economic Growth

OPEC Countries

The Hybrid Threshold Markov Switching Model