The impact of Oil Price and Oil Price Fluctuation on Growth Exports and Inflation in Pakistan
In this study we employed the ARDL bound test in order to detect cointegration relation of oil price and oil price fluctuation with GDP, exports and inflation in Pakistan. Our results confirmed cointegration among the variables when GDP was considered as dependent variable, while in case of inflation as responding variable, the long run relation among the variables are confirm only when oil price was replaced with oil price fluctuations as an explanatory variable. Applying VECM technique, we confirmed that causal link is running from oil price and oil price fluctuation to GDP and inflation. We could not detect causality running from oil prices and oil price fluctuation to exports or vice versa. Finally the augmented granger causality verified our findings of causal relation running from oil price and oil price fluctuation to GDP and Inflation both in combination with other variables as well as individually. We found that oil price fluctuation compared to oil prices drastically and asymmetrically affect the macro-economy of Pakistan.
|Date of creation:||03 Nov 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- François Lescaroux & Valérie Mignon, 2008.
"On the Influence of Oil Prices on Economic Activity and Other Macroeconomic and Financial Variables,"
2008-05, CEPII research center.
- François Lescaroux & Valérie Mignon, 2008. "On the influence of oil prices on economic activity and other macroeconomic and financial variables ," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 32(4), pages 343-380, December.
- Zapata, Hector O & Rambaldi, Alicia N, 1997.
"Monte Carlo Evidence on Cointegration and Causation,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 59(2), pages 285-98, May.
- Zapata, Hector O. & Rambaldi, Alicia N., 1996. "Monte Carlo Evidence On Cointegration And Causation," Staff Papers 31690, Louisiana State University, Department of Agricultural Economics and Agribusiness.
- Gisser, Micha & Goodwin, Thomas H, 1986. "Crude Oil and the Macroeconomy: Tests of Some Popular Notions: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 95-103, February.
- Michael R. Darby, 1981.
"The Price of Oil and World Inflation and Recession,"
UCLA Economics Working Papers
228, UCLA Department of Economics.
- Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-51, September.
- Tatom, John A., 1988. "Are the macroeconomic effects of oil-price changes symmetric?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 325-368, January.
- Joao Tovar Jalles, 2009. "Do Oil Prices Matter? The Case of a Small Open Economy," Annals of Economics and Finance, Society for AEF, vol. 10(1), pages 65-87, May.
- Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 98(1), pages 85-106.
- Du, Limin & Yanan, He & Wei, Chu, 2010. "The relationship between oil price shocks and China's macro-economy: An empirical analysis," Energy Policy, Elsevier, vol. 38(8), pages 4142-4151, August.
- Jimmy Ran & JanP. Voon & Guangzhong Li, 2010. "How Do Oil Price Shocks Affect A Small Non-Oil Producing Economy? Evidence From Hong Kong," Pacific Economic Review, Wiley Blackwell, vol. 15(2), pages 263-280, 05.
- Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
- Stephen P.A. Brown & Mine K. Yücel, 1999. "Oil prices and U.S. aggregate economic activity: a question of neutrality," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 16-23.
- Steven J. Davis & John Haltiwanger, 1999.
"Sectoral Job Creation and Destruction Responses to Oil Price Changes,"
NBER Working Papers
7095, National Bureau of Economic Research, Inc.
- Davis, Steven J. & Haltiwanger, John, 2001. "Sectoral job creation and destruction responses to oil price changes," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 465-512, December.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:52560. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.