Abstract
This paper examines the effects of oil price shocks on the real GDP of the Gulf Cooperation Council (GCC) countries. The empirical method used is the nonlinear cointegrating autoregressive distributed lag (NARDL) model of Shin et al. (2013) in which short-run and long-run nonlinearities are introduced via positive and negative partial sum decompositions of the explanatory variable(s). The results suggest evidence of asymmetries in all the cases. We find significant positive oil price changes in all the cases with the expected positive sign, implying that increases in oil price lead to increases in real GDP. Conversely, negative oil price changes are significant for only Kuwait and Qatar with the expected positive sign, suggesting that decreases in oil price lead to decreases in their real GDP. Further analysis implemented using panel data shows that positive oil prices changes increase real GDP and negative changes decrease real GDP. Overall, the results suggest that positive oil price changes have a considerably larger impact on real GDP than negative changes.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
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.