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Oil Price and Real GDP Growth of Ecuador: A Vector Autoregressive Approach

Author

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  • Jesser PALADINES

    (Universidad T cnica de Machala, School of Economics. Faculty of Business Studies, Machala, Ecuador.)

Abstract

Ecuador is an oil exporter country but it is also an importer of oil derivatives products, in this research the relationship between the world average price of oil and the GDP per capital of Ecuador is studied, taking annual data of both from 1980 to 2015 and using the methodology of Vector Autoregressive (VAR), it is concluded according to the Impulse Response Function that a positive shock on the price of oil affects positively the GDP growth of Ecuador for 2 unit times and then returns to its natural state later. This must be explained because Ecuador is a net exporter of oil, the VAR model showed itself stable, in addition it was demonstrated that there is a causal relationship of GDP to the Price according to methodology of Toda-Yamamoto.

Suggested Citation

  • Jesser PALADINES, 2017. "Oil Price and Real GDP Growth of Ecuador: A Vector Autoregressive Approach," Journal of Economics and Political Economy, EconSciences Journals, vol. 4(1), pages 71-78, March.
    • Handle: RePEc:cvv:journ1:v:4:y:2017:i:1:p:71-78
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    References listed on IDEAS

    as
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    4. Mork, Knut Anton, 1989. "Oil and Macroeconomy When Prices Go Up and Down: An Extension of Hamilton's Results," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 740-744, June.
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    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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