Citation:

Adhitya Wardhono, M. Abd. Nasir, Cipis Gema Qori’ah, Yulia Indrawati. "Examining the Relationship Between Oil Price Volatility and Economic Growth in Selected ASEAN Countries" International Research Journal of Economics and Management Studies, Vol. 3, No. 12, pp. 54-60, 2024.

Abstract:

The trade cycle and monetary policy paved the way for asymmetry in the behavior of oil prices. On the support, it can increase the rate that does not cause inflation and inflation of any requested policy stimulus. We use the Panel Vector Autoregressive (PVAR) model to analyze price dynamics on economic movements in annual data for 2008 - 2023 in four ASEAN countries. Our results show an asymmetry between oil prices and economic growth, as indicated by the PVAR and IRF test values. Our policy recommendations for these countries need to be carried out to reduce dependence on oil as a factor of production.

References:

[1] Abdelsalam, M. A. M. (2023). Oil price fluctuations and economic growth: the case of MENA countries. Review of Economics and Political Science, 8(5), 353–379. https://doi.org/10.1108/REPS-12-2019-0162
[2] Akinsola, M. O., & Odhiambo, N. M. (2020). Asymmetric effect of oil price on economic growth: Panel analysis of low-income oil-importing countries. Energy Reports, 6, 1057–1066. https://doi.org/10.1016/j.egyr.2020.04.023
[3] Almasria, N. A., Aldboush, H. H., Al-Kasasbeh, O., Lutfi, A., Alhajahmad, F. B., Barrak, T. Al, & Alsheikh, G. (2024). Oil Price Volatility and Economic Growth: Evidence from the Middle East. International Journal of Energy Economics and Policy, 14(3), 417–421. https://doi.org/10.32479/ijeep.15484
[4] Alom, F. (2015a). An Investigation into the Crude Oil Price Pass-Through to the Macroeconomic Activities of Malaysia. In Energy Procedia (Vol. 79). Elsevier B.V. https://doi.org/10.1016/j.egypro.2015.11.531
[5] Alom, F. (2015b). An Investigation into the Crude Oil Price Pass-Through to the Macroeconomic Activities of Malaysia. In Energy Procedia (Vol. 79). Elsevier B.V. https://doi.org/10.1016/j.egypro.2015.11.531
[6] Artami, R. J., & Hara, Y. (2018a). The Asymmetric Effects of Oil Price Changes on the Economic Activities in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 7(1), 59–76. https://doi.org/10.15408/sjie.v7i1.6052
[7] Artami, R. J., & Hara, Y. (2018b). The Asymmetric Effects of Oil Price Changes on the Economic Activities in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 7(1), 59–76. https://doi.org/10.15408/sjie.v7i1.6052
[8] Asmara, A., Oktaviani, R., Kuntjoro, N., & Firdaus, M. (2016a). Volatilitas Harga Minyak Dunia dan Dampaknya Terhadap Kinerja Sektor Industri Pengolahan dan Makroekonomi Indonesia. Jurnal Agro Ekonomi, 29(1), 49. https://doi.org/10.21082/jae.v29n1.2011.49-69
[9] Asmara, A., Oktaviani, R., Kuntjoro, N., & Firdaus, M. (2016b). Volatilitas Harga Minyak Dunia dan Dampaknya Terhadap Kinerja Sektor Industri Pengolahan dan Makroekonomi Indonesia. Jurnal Agro Ekonomi, 29(1), 49. https://doi.org/10.21082/jae.v29n1.2011.49-69
[10] Berument, M. H., Ceylan, N. B., & Dogan, N. (2010a). The impact of oil price shocks on the economic growth of selected MENA 1 countries. Energy Journal, 31(1), 149–176. https://doi.org/10.5547/issn0195-6574-ej-vol31-no1-7
[11] Berument, M. H., Ceylan, N. B., & Dogan, N. (2010b). The impact of oil price shocks on the economic growth of selected MENA 1 countries. Energy Journal, 31(1), 149–176. https://doi.org/10.5547/issn0195-6574-ej-vol31-no1-7
[12] Bondzie, E. A., Bartolomeo, G. Di, & Fosu, G. O. (2014). Oil Price Fluctuations and it Impact on Economic Growth: A Dsge Approach. International Journal of Academic Research in Business and Social Sciences, 4(2). https://doi.org/10.6007/ijarbss/v4-i2/626
[13] Brown, S. P. A., & Yücel, M. K. (2002). Energy prices and aggregate economic activity: An interpretative survey. Quarterly Review of Economics and Finance, 42(2), 193–208. https://doi.org/10.1016/S1062-9769(02)00138-2
[14] Cavalcanti, T. V. D. V, Mohaddes, K., & Raissi, M. (2015). Wp1212.Pdf.
[15] Chang, Y., & Wong, J. F. (2003). Oil price fluctuations and Singapore economy. Energy Policy, 31(11), 1151–1165. https://doi.org/10.1016/S0301- 4215(02)00212-4
[16] Gadea, M. D., Gómez-Loscos, A., & Montañés, A. (2016). Oil price and economic growth: A long story? Econometrics, 4(4). https://doi.org/10.3390/econometrics4040041
[17] Gollier, C., & Treich, N. (2003). Decision-Making under Scientific Uncertainty: The Economics of the Precautionary Principle. Journal of Risk and Uncertainty, 27(1), 77–103. https://doi.org/10.1023/A:1025576823096
[18] Hamilton, J. D. (2003). What is an oil shock? Journal of Econometrics, 113(2), 363–398. https://doi.org/10.1016/S0304-4076(02)00207-5
[19] Ifeonyemetalu, O. & O. (2020). Impact of Oil Price Fluctuation on Economic Growth in Nigeria Impact of Oil Price Fluctuation on Economic Growth in Nigeria. PalArch’s Journal of Archaeology of Egypt …, November. https://doi.org/10.9790/5933-1106034354
[20] Ito, K. (2012). The impact of oil price volatility on the macroeconomy in Russia. Annals of Regional Science, 48(3), 695–702. https://doi.org/10.1007/s00168-010-0417-1
[21] Jiménez-Rodríguez, R., & Sánchez, M. (2005a). Oil price shocks and real GDP growth: Empirical evidence for some OECD countries. Applied Economics, 37(2), 201–228. https://doi.org/10.1080/0003684042000281561
[22] Jiménez-Rodríguez, R., & Sánchez, M. (2005b). Oil price shocks and real GDP growth: Empirical evidence for some OECD countries. Applied Economics, 37(2), 201–228. https://doi.org/10.1080/0003684042000281561
[23] Kim, D. H., & Lin, S. C. (2018). Oil Abundance and Income Inequality. Environmental and Resource Economics, 71(4), 825–848. https://doi.org/10.1007/s10640-017-0185-9
[24] Le, V. T., & Vinh, N. T. T. (2011). The impact of oil prices, real effective exchange rate and inflation on economic activity: Novel evidence for Vietnam. 1–31.
[25] Maalel, N., & Mahmood, H. (2018). Oil-abundance and macroeconomic performance in the gcc countries. International Journal of Energy Economics and Policy, 8(2), 182–187.
[26] Maji, I. K., & Danjuma, Y. R. (2023). Impact of Oil Price Volatility and Trade Openness on a Growing Economy. Gusau Journal of Economics and Development Studies, 4(1), 98–108. https://doi.org/10.57233/gujeds.v4i1.7
[27] Mehrara, M. (2007). Energy consumption and economic growth: The case of oil exporting countries. Energy Policy, 35(5), 2939–2945. https://doi.org/10.1016/j.enpol.2006.10.018
[28] Nwanna, I. O., & Eyedayi, A. M. (2016). Impact of Crude Oil Price Volatility on Economic Growth in Nigeria (1980-2014). Journal of Business and Management, 18(6), 10–19. https://doi.org/10.9790/487X-1806011019
[29] Pao, H. T., & Tsai, C. M. (2010). CO2 emissions, energy consumption and economic growth in BRIC countries. Energy Policy, 38(12), 7850–7860. https://doi.org/10.1016/j.enpol.2010.08.045
[30] Rahman, S., & Serletis, A. (2019). Oil Prices and the Stock Markets: Evidence from High Frequency Data. The Energy Journal, 40(01). https://doi.org/10.5547/01956574.40.si2.srah
[31] Rasheed, S. A. (2023). The Impact of Oil Price Volatility on Economic Growth and Stability in Iraq through the Public Expenditure for the Period (2003- 2020). In International Journal of Professional Business Review (Vol. 8, Issue 6). https://doi.org/10.26668/businessreview/2023.v8i6.2059
[32] Sa’adah, A. F., Fauzi, A., & Juanda, B. (2017a). Peramalan Penyediaan dan Konsumsi Bahan Bakar Minyak Indonesia dengan Model Sistem Dinamik. Jurnal Ekonomi Dan Pembangunan Indonesia, 17(2), 118–137. https://doi.org/10.21002/jepi.v17i2.661
[33] Sa’adah, A. F., Fauzi, A., & Juanda, B. (2017b). Peramalan Penyediaan dan Konsumsi Bahan Bakar Minyak Indonesia dengan Model Sistem Dinamik. Jurnal Ekonomi Dan Pembangunan Indonesia, 17(2), 118–137. https://doi.org/10.21002/jepi.v17i2.661
[34] Tehranchian, A. M., & Abdi Seyyedkolaee, M. (2017). The impact of oil price volatility on the economic growth in Iran: An application of a threshold regression model. International Journal of Energy Economics and Policy, 7(4), 165–171.
[35] Thakur, G. S. M., Bhattacharyya, R., & Mondal, S. S. (2016). Artificial neural network based model for forecasting of inflation in India. Fuzzy Information and Engineering, 8(1), 87–100. https://doi.org/10.1016/j.fiae.2016.03.005
[36] Udemba, E. N., & Yalçıntaş, S. (2021). Interacting force of foreign direct invest (FDI), natural resource and economic growth in determining environmental performance: A nonlinear autoregressive distributed lag (NARDL) approach. Resources Policy, 73(May). https://doi.org/10.1016/j.resourpol.2021.102168
[37] van Eyden, R., Difeto, M., Gupta, R., & Wohar, M. E. (2019a). Oil price volatility and economic growth: Evidence from advanced economies using more than a century’s data. Applied Energy, 233–234(September 2018), 612–621. https://doi.org/10.1016/j.apenergy.2018.10.049
[38] van Eyden, R., Difeto, M., Gupta, R., & Wohar, M. E. (2019b). Oil price volatility and economic growth: Evidence from advanced economies using more than a century’s data. Applied Energy, 233–234(September 2018), 612–621. https://doi.org/10.1016/j.apenergy.2018.10.049
[39] Wardhono, A., Dana, B. S., & Nasir, M. Abd. (2017). Rethinking the exchange rate disconnect puzzle theory in ASEAN-6. Economic Journal of Emerging Markets, 9(1), 98–103. https://doi.org/10.20885/ejem.vol9.iss1.art10
[40] Wardhono, A., Putra, P. T. N., & Nasir, M. A. (2016). Causal study of macroeconomic indicators on carbon dioxide emission in ASEAN 5. Economics and Policy of Energy and the Environment, 2016(2), 15–31. https://doi.org/10.3280/EFE2016-002002
[41] Yu, E. S. H., & Hwang, B. K. (1984). The relationship between energy and GNP. Further results. Energy Economics, 6(3), 186–190. https://doi.org/10.1016/0140-9883(84)90015-X
[42] Zhu, Q., & Singh, G. (2016a). The impacts of oil price volatility on strategic investment of oil companies in North America, Asia, and Europe. Pesquisa Operacional, 36(1), 1–21. https://doi.org/10.1590/0101-7438.2016.036.01.0001
[43] Zhu, Q., & Singh, G. (2016b). The impacts of oil price volatility on strategic investment of oil companies in North America, Asia, and Europe. Pesquisa Operacional, 36(1), 1–21. https://doi.org/10.1590/0101-7438.2016.036.01.0001

Keywords:

Oil Price Volatility, Economic Growth, PVAR, ASEAN.