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Oil price uncertainty and savings in South Africa

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  • Diksha Dave
  • Goodness C. Aye

Abstract

Oil prices have become increasingly important to determine indicators such as inflation; this in turn affects savings and investments. This paper investigates the impact of the volatility of oil prices on savings in South Africa using quarterly data covering the period 1960–2014. The study used the GARCH-in-mean VAR model. This model also provides a way of examining the effect of a negative and positive shock in oil prices on savings. The outcome of this study proves that oil price uncertainty which is measured as the conditional standard deviation of a one-step-ahead forecast error of the change in oil price affects South Africa's savings in a negative way. The responses of savings to a positive and negative oil price shocks are symmetric in both direction and magnitude.

Suggested Citation

  • Diksha Dave & Goodness C. Aye, 2015. "Oil price uncertainty and savings in South Africa," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 39(3), pages 285-297, September.
    • Handle: RePEc:bla:opecrv:v:39:y:2015:i:3:p:285-297
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    File URL: http://hdl.handle.net/10.1111/opec.12049
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    Cited by:

    1. Cheng, Dong & Shi, Xunpeng & Yu, Jian & Zhang, Dayong, 2019. "How does the Chinese economy react to uncertainty in international crude oil prices?," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 147-164.
    2. Śmiech, Sławomir & Papież, Monika & Rubaszek, Michał & Snarska, Małgorzata, 2021. "The role of oil price uncertainty shocks on oil-exporting countries," Energy Economics, Elsevier, vol. 93(C).
    3. Gupta, Rangan & Pierdzioch, Christian & Salisu, Afees A., 2022. "Oil-price uncertainty and the U.K. unemployment rate: A forecasting experiment with random forests using 150 years of data," Resources Policy, Elsevier, vol. 77(C).
    4. Yin, Libo & Yang, Sen, 2023. "Oil price returns and firm's fixed investment: A production pattern," Energy Economics, Elsevier, vol. 125(C).

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