Abstract
This study investigates the asymmetric impact of oil price shocks on trade deficit for Pakistan economy, using NonLinear ARDL analysis, over the period of 1990QI-2016QIV. The estimation results confirm the presence of nonlinearity in the series. The bound testing approach also establishes the existence of asymmetric relationship between trade deficit and oil price movements. We find that increase (decrease) in oil prices and wholesale prices and decrease (increase) in industrial product results in a significant increase (decrease) in trade deficit. The adjustment pattern, using dynamic multipliers, reveals that the new long-run equilibrium for oil prices can be archived after 1 year and 2 months, wholesale prices by 3 years and 8 months and for industrial growth in 6 years and 6 months. This paper has important policy implications for Pakistani decision-makers.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
More From: The Journal of International Trade & Economic Development
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.