Investigating the impact of crude oil prices on economic activity in selected OPEC member countries

Document Type : Original Article

Authors

1 Associate Professor of Economics, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad

2 Professor of Economics, Faculty of Administrative Sciences and Economics, Ferdowsi University

3 Master's student in Economics, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad

Abstract

The effect of crude oil prices on the economic activity of countries has been considered for decades.  In this period of time, the empirical link between oil price and economic activity has been continuously investigated, but the measured results have shown different results and are contradictory.  Therefore, the present study aims to investigate the effect of crude oil prices on the set of economic activities in selected OPEC countries in the period 2000 to 2019.  This research uses the panel data method and the system of simultaneous equations approach by the three-stage least squares (3SLS) method.  The results obtained from the estimation of the considered models indicate a positive and significant effect of crude oil price on the consumer price index and liquidity volume, respectively, at the rate of 221/0 and 200/1.  Also, the results indicating the negative and significant effect of crude oil price on exchange rate and interest rate are -195/0 and -175/0, respectively.

Keywords

References

Al Imran, R., & Al Imran, S.A.  (2012).  Investigating the effect of economic growth on the consumer price index in Iran. Economic Sciences Quarterly, 5 (17), 141-164. (in Persian)
Alley, I., Asekomeh, A., Mobolaji, H., & Adeniran, Y. A. (2014), Oil price shocks and Nigerian economic growth, European scientific journal, 10(19), 375-391.
Bergmann, P. J. E. E. (2019). Oil price shocks and GDP growth: Do energy shares amplify causal effects?. Energy Econonics, 80(C), 1040-1010.
Bernanke, B. S. (1983). Irreversibility, Uncertainty, and Cyclical Investment. The Quarterly Journal of Economics, 98(1), 85-106.
Hamilton, J. D. (1988). A Neoclassical Model of Unemployment and the Business Cycle. Journal of Political Economy, 96, 593-617.
Hemti, Y., Karimi, H. R., & Hemti, A. R.  (2019).  Causal-effect model of oil price effect on economic growth index and inflation rate.  The 6th International Conference on Industrial and Systems Engineering (ICISE 2020). (in Persian)
Hosseini Nesab,S. E., & mirkazemi mod, M.  (2010).  The effect of oil shocks on selected macroeconomic variables of oil exporting and importing countries. Financial Economics (Financial Economics and Development), 3(7), 1-15. (in Persian)
Long, S., & Liang, J. (2018). Asymmetric and nonlinear pass-through of global crude oil price to China’s PPI and CPI inflation. Economic research-Ekonomska istraživanja, 31(1), 240-251.
Loungani, P. (1986). Oil Price Shocks and the Dispersion Hypothesis. Review of Economics and Statistics, 58, 536-539.
Manjeev, M.R., & Nosrati, H.  (2017).  Basics of econometrics: together with Eveyuz and Stata.  Tehran: Mehrban Eshar Publishing House. (in Persian)
Mishkin, F. S. (2007). What should central banks do?. Monetary policy strategy, 37-58.
Mohammadi, T., Abu Nouri, A. A .,& Mohammad Nejad, R.  (2014).  Analysis of the causal relationship between inflation rate and unemployment in Iran's economy. Financial Economics,  9(30), 29-46. (in Persian)
Ojikutu, O. T. (2017). Crude oil price volatility and its impact on Nigerian stock market performance( 1985-2014). International Journal of Energy Economics and Policy, 7(5), 302-311.
Olivo, V. (2005). Interest Rate Rules VS Money Growth Rules: Some Theoretical Issues and an Empirical Application for Venezuela. University Library of Munich, Germany.
Onoh, J. O., Nwachukwu, T., & Mbanasor, C. A. (2018). Economic growth in OPEC member states: Oil export earnings versus non-oil export earnings. Journal of Developing Country Studies, ISSN, 2225-0565.
Picane, A. (2018). The effect of crude oil price changes on sector gross domestic product contribution and employment levels in South Africa, University of Johannesburg.
Ratti, R., & Vespignani, J. (2016). Oil prices and global factormacroeconomic variables. Energy Econ, 59,198–212.
Samadi, S., Sarkhosh Sera, A., & Amini, O.  (2017).  Asymmetric effects of oil price shocks on interest rate and economic growth of Iran. Economic Modeling Quarterly, 12(1), 27-52. (in Persian)
Wen, F., Min, F., Zhang, Y. J., & Yang, C. (2019). Crude oil price shocks, monetary policy, and China's economy. International Journal of Finance & Economics, 24(2), 812-827.
Journal of Econometric Modelling
Volume 8, Issue 4 - Serial Number 32
December 2023
Pages 135-160

Files

Share

How to cite

Statistics