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Crude Oil Price and Real GDP Growth: An Application of ARDL Bounds Cointegration and Toda-Yamamoto Causality Tests

Author

Listed:
  • Clovis Wendji Miamo

    (University of Dschang)

  • Elvis Dze Achuo

    (University of Dschang)

Abstract

The main objective of this study is to examine the causality between crude oil price and real GDP growth in Cameroon using annual data spanning from 1980 to 2018. The study adopts the Autoregressive Distributed Lag (ARDL) modelling framework, as well as the Bounds and Toda-Yamamoto cointegration and causality tests. Results from the ARDL estimates reveal that crude oil price has a positive significant effect on real GDP growth. This effect is consistent both in the short-run and long-run. We verified the existence of long-run cointegration following the Bounds test while the direction of causality was established thanks to the Toda-Yamamoto causality test, which showed evidence of unidirectional causality running from real GDP to crude oil price. Consequently, the study recommends that it is necessary for the government to increase domestic investments in the oil sector, strengthen the country's refinery capacity, create strategic crude oil reserves and ensure a proper allocation and management of oil revenues

Suggested Citation

  • Clovis Wendji Miamo & Elvis Dze Achuo, 2021. "Crude Oil Price and Real GDP Growth: An Application of ARDL Bounds Cointegration and Toda-Yamamoto Causality Tests," Economics Bulletin, AccessEcon, vol. 41(3), pages 1615-1626.
    • Handle: RePEc:ebl:ecbull:eb-21-00041
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    References listed on IDEAS

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    Cited by:

    1. Elvis Dze Achuo, 2022. "The nexus between crude oil price shocks and environmental quality: empirical evidence from sub-Saharan Africa," SN Business & Economics, Springer, vol. 2(7), pages 1-15, July.
    2. Sha, Zhiping, 2022. "Total natural resources, oil prices, and sustainable economic performance: Evidence from global data," Resources Policy, Elsevier, vol. 79(C).
    3. Elvis Dze Achuo & Tii N. Nchofoung & Simplice A. Asongu & Gildas Dohba Dinga, 2021. "Unravelling the Mysteries of Underdevelopment in Africa," Working Papers of the African Governance and Development Institute. 21/073, African Governance and Development Institute..
    4. Achuo, Elvis D., 2023. "Resource wealth and the development dilemma in Africa: The role of policy syndromes," Resources Policy, Elsevier, vol. 83(C).
    5. Clovis Wendji Miamo & Elvis Dze Achuo, 2022. "Can the resource curse be avoided? An empirical examination of the nexus between crude oil price and economic growth," SN Business & Economics, Springer, vol. 2(1), pages 1-23, January.
    6. Chien, FengSheng & Chau, Ka Yin & Sadiq, Muhammad & Hsu, Ching-Chi, 2022. "The impact of economic and non-economic determinants on the natural resources commodity prices volatility in China," Resources Policy, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    Economic Growth; ARDL Model; Crude Oil Price;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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