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Oil price shocks and domestic price investment in Ghana

Author

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  • Wiafe, Emmanuel A.
  • Barnor, Charles
  • Quaidoo, Christopher

Abstract

This study examines the effect of oil prices on domestic investment in Ghana using quarterly time series data from 1984 to 2012. Dynamic Ordinary Least Squares (DOLS) technique was used to estimate the effect of oil price on domestic investment in Ghana. The analysis revealed that there is long run relationship between domestic private investment, oil price shocks, exchange rate, inflation, income and credit to private sector. The study found negative effect of oil price shocks on investment. This indicate that shock in oil prices leads to a reduction in investment. It is therefore recommended that mechanisms be put in place to check or cushion the economy against oil price shocks and variability. This could be done through providing domestic credit to the private sector to boast investment.

Suggested Citation

  • Wiafe, Emmanuel A. & Barnor, Charles & Quaidoo, Christopher, 2014. "Oil price shocks and domestic price investment in Ghana," MPRA Paper 60777, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:60777
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    File URL: https://mpra.ub.uni-muenchen.de/60829/1/MPRA_paper_60777.pdf
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    References listed on IDEAS

    as
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    3. Michaelides, Panayotis G. & Belegri-Roboli, Athena & Economakis, George & Milios, John G., 2005. "The Determinants of Investment Activity in Greece (1960-’99)," MPRA Paper 74548, University Library of Munich, Germany.
    4. Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(1), pages 85-106.
    5. Catherine Fuss & Philip Vermeulen, 2008. "Firms' investment decisions in response to demand and price uncertainty," Applied Economics, Taylor & Francis Journals, vol. 40(18), pages 2337-2351.
    6. Don Bredin & John Elder & Stilianos Fountas, 2010. "The Effects of Uncertainty about Oil Prices in G-7," Working Papers 200840, Geary Institute, University College Dublin.
    7. Maame Esi Eshun & George Adu & Emmanuel Buabeng, 2014. "The Financial Determinants of Private Investment in Ghana," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 3(1), pages 25-40.
    8. Henry, Peter Blair, 2000. "Do stock market liberalizations cause investment booms?," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 301-334.
    9. Ndikumana, Leonce, 2000. "Financial Determinants of Domestic Investment in Sub-Saharan Africa: Evidence from Panel Data," World Development, Elsevier, vol. 28(2), pages 381-400, February.
    10. Serven, Luis & Solimano, Andres, 1992. "Private Investment and Macroeconomic Adjustment: A Survey," The World Bank Research Observer, World Bank, vol. 7(1), pages 95-114, January.
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    Cited by:

    1. AIGHEYISI Oziengbe Scott, 2018. "Oil Price Volatility And Business Cycles In Nigeria," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(2), pages 31-40, August.
    2. Frank Gyimah Sackey & Richard Kofi Asravor & Emmanuel Orkoh & Isaac Ankrah, 2025. "Do petroleum price fluctuations under price deregulation cause business cycles in Ghana?," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 24(1), pages 30-42, February.

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    More about this item

    Keywords

    Investment; Oil price shocks; Oil price; DOLS; Shocks; Ghana;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other
    • G00 - Financial Economics - - General - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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