Estimating Long-run Elasticity between Crude Oil Consumption, Real Oil Price, and Real GDP in Global Markets

Abstract

The study examine the long-run relationship between crude oil consumption, real oil price, and real GDP using a quarterly time series from 1993 to 2020. the empirical analysis uses the Dynamic Least Squares (DOLS) model for both short-run and long-run elasticity among the model variables to estimate the short-run and long-run elasticity of demand for crude oil consumption in 10 regions using Panel Dynamic Least Squares (DOLS) and Pooled Mean Group-AR Distributed Lag Models (PMG/ARDL). The empirical analysis findings confirme that the demand for crude oil internationally is highly insensitive to changes in price and real GDP.