Linking Historical Oil Price Volatility and Growth: Investment and Trade Dynamics

Authors

  • Olukorede Abiona University of Leicester

Abstract

This paper investigates the impact of historical crude oil-price fluctuation on diverse economies. It employs the use of Structural Vector Autoregressive (SVAR) and Panel Vector Autoregressive (PVAR) methodologies as innovative paths of investigating oil-shock association. While evidence of linear and non-linear shock specifications hold for developed economies within the SVAR specification, growth patterns for emerging counterpart are only defined by the linear shock. The asymmetric behaviour of growth response along shock specifications and development is predisposed to two main channels: First is the differential systemic and institutional framework in place across economies, making shock vulnerabilities differ. Secondly, identification restrictions imposed within SVAR methodology is perceived to have overruled conditions consistent with the non-linear shock model. Positive oil-price shocks benefits accrue to the global community through investment while negative oil-price shocks are transmitted through interest rate triggered trade cut-backs.Keywords: Oil-price Volatility; Asymmetric Growth; Structural Vector Autoregressive (SVAR); Panel VAR Methodology; Trade; InvestmentJEL Classifications: C01; O47; Q32; Q40

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Author Biography

Olukorede Abiona, University of Leicester

Graduate Teaching Assistant/PhD CandidateDepartment of Economics

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Published

2015-04-18

How to Cite

Abiona, O. (2015). Linking Historical Oil Price Volatility and Growth: Investment and Trade Dynamics. International Journal of Energy Economics and Policy, 5(2), 598–611. Retrieved from https://econjournals.com./index.php/ijeep/article/view/1145

Issue

Vol. 5 No. 2 (2015)

Section

Articles

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