Oil threshold value between oil price and production

Abstract

This study proposes a panel smooth transition regression (PSTR) model to investigate the nonlinear relationship between crude oil prices and crude oil production in 122 countries, both OPEC and non-OPEC, from March 1994 to October 2015. The statistical test for the existence of a threshold effect indicates that the relationship between oil prices and oil production is nonlinear, with different changes over time among the oil price and transition variables. Additionally, a threshold value exists. Furthermore, crude oil price volatility exhibits asymmetric responses to production volatility by fluctuating above or below the threshold value. Finally, when crude oil price volatility with a lag of two periods exceeds the threshold value, crude oil production changes have a positive impact on crude oil price volatility. In contrast, when crude oil price volatility with a lag of two periods is less than the threshold value, crude oil production changes have a negative impact on price volatility.

Methodology for examining the relationship between oil rent and crude oil production: Evidence from Cameroon

“…In addition, the price of crude oil influences the production of crude oil [ 39 , 1 ] and production influences the price of crude oil [ 40 , 41 ] . If the price remains high in a context where the oil fields are located either in a hostile environment or in difficult exploitation conditions, then the oil producing multinationals will be very cautious.…”

A new look at asymmetric effect of oil price changes on inflation: Evidence from Malaysia

“…These nonlinear models help to detect breaks or threshold values that trigger changes in the relationship and provide the results in different regimes. For instance, Bala et al 19 (threshold autoregressive and momentum threshold autoregressive models), Yang et al 20 (panel smooth transition regression), Donayre and Wilmot 21 (threshold vector autoregression), and Ozdemir and Akgul 22 (MS-VAR model). These studies have evidence on the nonlinear/ asymmetric effect of oil price on domestic variables.…”

The Dynamic Effect of Unemployment Rate and Crime Rate on Suicide Rate under Economic Growth Rate

“…is objective estimation method avoids biases in the estimated model extremes due to subjective preconceptions of the researchers. Given the characteristics and advantages of the PSTR model, more and more scholars have recently adopted such models in their research [31][32][33][34][35][36].…”