Do oil prices predict economic growth? New global evidence

Narayan, Paresh Kumar; Sharma, Susan Sunila; Poon, Wai Ching; Westerlund, Joakim

doi:10.1016/j.eneco.2013.11.003

Cited by 124 publications

(78 citation statements)

References 29 publications

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“…Estimates of τ 0 indicate that a 1% point rise in growth real oil price leads to an increase in growth in OPEC oil production of around 0.05% points during 1996:Q1 to 2012:Q4. These forecast results confirm that the findings for the early period, 1974:Q1 to 1996:Q4, that growth in OPEC oil production responds to growth in 21 Note that Westerlund and Narayan (2012) and Narayan et al (2014) provide an alternative assumption for ρ, that ρ ¼ 1 þ c T , where c ≤ 0 is a drift parameter that measures the degree of persistency in the predictor variable and T is the number of observations.…”

Section: Predicting Growth In Opec Oil Productionsupporting

confidence: 75%

“…In columns 1 and 2 we follow Lewellen (2004) in setting ρ = 0.999. We also report the results following Westerlund and Narayan (2012) and Narayan et al (2014) in setting ¼ 1 þ c T . In columns 3 and 4, c = 0, and in columns 5 and 7, c = −2.…”

Section: Resultsmentioning

confidence: 99%

“…An additional potential problem is that growth in oil production is heteroskedastic, making it challenging to assess the value of information coming from the predictors. For these reasons we employ an OLS bias-adjusted heteroskedasticity consistent standard errors and covariance technique due to Lewellen (2004), Westerlund and Narayan (2012) and Narayan et al (2014) to predict OPEC and non-OPEC oil production. Fan and Yao (2003) provide a detailed discussion of techniques for forecasting when innovations in the prediction variables are correlated with the variables being predicted and there is heteroskedasticity.…”

Section: Predicting Growth In Opec and Non-opec Oil Production And Rementioning

confidence: 99%

See 2 more Smart Citations

OPEC and Non-OPEC Oil Production and the Global Economy

Ratti

Vespignani

2014

SSRN Journal

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Section: Predicting Growth In Opec Oil Productionsupporting

confidence: 75%

Section: Resultsmentioning

confidence: 99%

Section: Predicting Growth In Opec and Non-opec Oil Production And Rementioning

confidence: 99%

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OPEC and Non-OPEC Oil Production and the Global Economy

Ratti

Vespignani

2014

SSRN Journal

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“…In addition to the investigation of the explanatory power of the price of oil for economic growth, a few papers have also considered its predictive power. In this vein, a recent relevant contribution dealing with forecasting issues is Narayan et al (2014) who have investigated the predictive content of oil prices for economic growth. The authors find that the nominal price of oil predicts economic growth for 37 of the 45 considered countries, and that for around 70% of these economies there is evidence of out-of-sample predictability.…”

Section: Introductionmentioning

confidence: 99%

Oil price shocks and global imbalances: Lessons from a model with trade and financial interdependencies

2015

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The aim of this paper is to investigate oil price shocks' effects and their associated transmission channels on global imbalances. To this end, we rely on a Global VAR approach that allows us to account for trade and financial interdependencies between countries. Considering a sample of 30 oil-exporting and importing economies over the 1980-2011 period, we find that the nature of the shock-demand-driven or supply-drivenmatters in understanding the effects of oil price shocks on global imbalances. In addition, we show that the main adjustment mechanism to oil shocks is based on the trade channel, the valuation channel being at play only on the short run.JEL Classification: C32, F32, Q43.

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“…Studies commonly use international crude oil prices for this variable (e.g. Korhonen & Ledyaeva, 2010;Irhan et al, 2011;Narayan et al, 2014). However, this measure does not seem to reflect real cost, since the exchange rate movements and high local taxes change the prices in domestic markets, as in the Turkey's case.…”

Section: Data Sets and The Modelmentioning

confidence: 99%

Currency Depreciation, Trade Balance and Intra-Industry Trade Interactions in Turkey’s OECD Trade

Demiral¹

2016

IJEF

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This study re-examines the determinants of Turkey's trade balance in its manufactures trade with 33 OECD-member countries for the short-run and the long-run. Unlike other studies, in the relationships we also control the moderating effects of the availability of import substitutes proxied by intra-industry trade. We analyze quarterly aggregated time-series data of the period spanning from 1998.QI to 2015.QIII, following the autoregressive distributed lag (ARDL) bounds testing approach to the cointegration and the error correction modeling. Estimation results reveal that real effective exchange rate, together with domestic and foreign incomes are still among the core determinants of Turkey's trade balance in the manufacturing sectors. There is no significant impact of domestic final oil prices that also include all the taxes on gasoline. The trade balance depends on domestic income negatively and the aggregated income of the OECD countries positively. The finding that real depreciation of Turkish lira against to those of Turkey's OECD trade partners improves trade balance in both the short-run and the long-run, indicates no evidence of J-curve adjustment process. Unsurprisingly, the intra-industry trade seems to be an important factor that moderates the elasticities of trade balance to its determinants, especially to real effective exchange rate and domestic income. Overall results underline the importance of import-substitution capability besides the export-oriented production to ease the longstanding large trade deficits for Turkey.

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Do oil prices predict economic growth? New global evidence

Cited by 124 publications

References 29 publications

OPEC and Non-OPEC Oil Production and the Global Economy

OPEC and Non-OPEC Oil Production and the Global Economy

Oil price shocks and global imbalances: Lessons from a model with trade and financial interdependencies

Currency Depreciation, Trade Balance and Intra-Industry Trade Interactions in Turkey’s OECD Trade

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