Influence of oil prices on inflation in South Asia: Some new evidence

Zakaria, Muhammad; Khiam, Shahzeb; Mahmood, Hamid

doi:10.1016/j.resourpol.2021.102014

Cited by 44 publications

(19 citation statements)

References 39 publications

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“…The result of the Table 3 shows that as an oil-importing country's dependence on outside oil has increased dramatically during the last decades, such as a 50% increase in 2007, and at the same time, the reforms of the oil-pricing mechanism have made the domestic oil price be more and correlated with the world oil price. Therefore, the crude oil price has been significantly affecting the South Asian economies which is consistent with the previous findings (Sharma et al, 2018;Zakaria et al, 2021).…”

Section: Granger Causality Testsupporting

confidence: 91%

Macroeconomic effects of crude oil shocks: Evidence from South Asian countries

et al. 2022

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This research tends to convey the relationship between crude oil price volatility and key macroeconomics indicators, i.e., gross domestic product (GDP), inflation rate (IR), interest rate, and exchange rate. The study collected the time-series data (2000–2020) from the South Asian countries (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka), and employed macroeconomic policy modeling tools (impulse response function and the prediction error variance decomposition technique) in the vector autorepression (VAR) setup. The outcome of the impulse response function explained considerable variance among macroeconomic indicators in response to crude oil price shocks. The macroeconomic indicators are extremely susceptible to minor fluctuations in oil prices causing a significant impact on the region's socioeconomic situation. The result of variance decomposition indicates that each country in the region reacts differently to crude oil price volatility which reflects their macroeconomics fundamentals, independent policy, sector structure, and country differences. The findings support change in public policies in a way to reduce their dependency on oil energy and encourage them toward renewal and green energy sources for better environmental results and sustainable development.

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Section: Granger Causality Testsupporting

confidence: 91%

Macroeconomic effects of crude oil shocks: Evidence from South Asian countries

et al. 2022

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“…They find that negative oil price shocks have stronger impact on inflation than positive oil price shocks. Zakaria et al (2021) find that world crude oil price shocks have positive impact on inflation in South Asian countries.…”

Section: Introductionmentioning

confidence: 87%

Crude Oil Price Changes and Inflation: Evidence for Asia and the Pacific Economies

Jiranyakul

2021

SSRN Journal

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This paper examines the influence of crude oil price on inflation in seven Asian and two of the pacific economies. The period of investigation is from 1987M5 to 2019M12. The results of cointegration tests reveal that there is stable positive long-run relationship between consumer price index and crude oil price in these countries. In the short run, there is unidirectional causality running from crude oil price change to inflation in most cases. The findings suggest accommodative monetary policy measures to combat high inflation rate.

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“…Second, the non-linear effects of oil price on inflation have been revealed based on nonlinear ARDL methods [ 9 , 29 ], the Markov Regime Switching Vector Autoregressive model [ 30 ], and non-linear causality tests [ 31 ]. Lacheheb and Sirag [ 32 ] proved the nonlinear impacts of oil price on inflation in Algeria.…”

Section: Literature Reviewmentioning

confidence: 99%

Revisiting the Dynamic Response of Chinese Price Level to Crude Oil Price Shocks Based on a Network Analysis Method

Sun

Wang

Jia

2022

Entropy

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Crude oil price shocks have led to a fluctuation in commodity prices through the industrial chain and supply–demand relationships, which can substantially influence a country’s economy. In this paper, we propose a transmission model of oil price shocks to Chinese price levels and explore the direct and indirect impacts of crude oil price shocks on various Chinese price indices, combining the Granger causality test, impulse response function, and network analysis method. The empirical data are the Brent, WTI, Dubai, and Daqing spot crude oil prices and eight categories of Chinese price indices from January 2011 to March 2020. We found the following results: (1) Consumer price index (CPI) and the price index for means of agricultural production (MAPPI) cannot be directly impacted by crude oil price fluctuations, while they could be indirectly affected. (2) The duration and degree of the impacts of oil prices on each price index vary, and the export price index (EPI) is the most significantly affected. (3) The proportion of the indirect impact in the total impact of crude oil price shocks ranges from 0.03% to 100.00%. Thus, indirect influence cannot be ignored when analyzing the influence of crude oil price fluctuation on Chinese price level.

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Influence of oil prices on inflation in South Asia: Some new evidence

Cited by 44 publications

References 39 publications

Macroeconomic effects of crude oil shocks: Evidence from South Asian countries

Macroeconomic effects of crude oil shocks: Evidence from South Asian countries

Crude Oil Price Changes and Inflation: Evidence for Asia and the Pacific Economies

Revisiting the Dynamic Response of Chinese Price Level to Crude Oil Price Shocks Based on a Network Analysis Method

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