Abstract
This paper looks at the long run and short run asymmetric impact of crude oil prices on Indonesia's economic growth. It also assesses whether household spending affects the economic growth in the ASEAN-4 Region (Indonesia, Singapore, Thailand and the Philippines) in the long run and short run. We use, to this end, annual time series data of crude oil prices, household consumption expenditure, and GDP for the period 1967-2018. To analyze the data, we employ a nonlinear panel autoregressive distributed lag model. The test results provide evidence that in the long-run, crude oil prices have an asymmetric impact on economic growth. Every 1% increase in crude oil prices, economic growth rises by 0.42%. Meanwhile, household spending does not affect economic growth in the long-run. Furthermore, in the short run, the test results show the presence of an asymmetric impact of crude oil prices on economic growth. Similarly, in the short run, household spending affects economic growth. Keywords: Crude Oil Prices, Household Spending, Economic Growth, Nonlinear Panel Autoregressive Distributed Lag Model. JEL Classifications: C33, E210, E310, O470. DOI: https://doi.org/10.32479/ijeep.9293
Highlights
All countries in the world are in need of crude oil as a source of raw materials for their industries
The OIL+, variable is the sum of positive change in crude oil prices, which we refer to as crude oil prices increase variable, and the OIL- variable is the sum of negative changes in crude oil prices we call the crude oil prices decline variable
We first examine the stationarity of the oil prices increase variable OIL+ crude oil prices decline (OIL-), household expenditure (CON), and economic growth (GDP) in level and first difference
Summary
All countries in the world are in need of crude oil as a source of raw materials for their industries. This need has triggered crude oil demand growth worldwide. From 2006 to 20019, the global demand for crude oil rose from 85.3 million barrels per day to 100.3 million barrels per day. This growth continues to rise and is projected to increase to 101.6 million barrels per day (Garside, 2019). For the ASEAN region, the demand for crude oil is projected at the level of 5.5 million barrels per day by 2040 in which there has been an increase of 3.4 barrels per day since 2017 (Tan and Peng, 2017)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Energy Economics and Policy
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.
