Empirical Investigation of Relationship Between Oil Price and Inflation: The Case of India

Sultan, Zafar Ahmad; Alkhateeb, Tarek Tawfek Yousef; Fawaz, Mahmoud M.

doi:10.32479/ijeep.9015

Cited by 10 publications

(5 citation statements)

References 18 publications

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“…Studies in net oil-exporting countries such as Nigeria, Indonesia, Russia and Venezuela reveal the negative effect of oil price shock on exchange rate. Respectively, studies such as Nwani and Orie (2016), Sultan et al (2014), Balashova and Serletis (2020) and Mendoza and Vera (2010) [26][27][28][29] for these countries obtained a negative effect of oil price on the exchange rate and coincided with economic theory. The incipient negative effect of oil price on the exchange rate reflects that the increase in oil price slightly increased Ghana's oil revenue.…”

Section: Impact Of Crude Oil Pricementioning

confidence: 53%

Structural Vector Autoregressive Analysis of Crude Oil Price Shocks on Ghana’s Economy

Osman

Sebu

Iledare

et al. 2023

UJFE

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The paper analyses the extent to which crude oil price shocks impact GDP growth, exchange rate, interest rate and inflation of an emerging oil exporting economy, Ghana. The Structural Vector Autoregressive model is used to analyse the quarterly data from 2009q1 -2020q4. The results showed that exchange rate and GDP growth respond positively but temporal to the impulse of crude oil price. In contrast, inflation and interest rate respond negatively to crude oil price shock. Specifically, the exchange rate appreciates in the initial quarter and begins to depreciate, whereas GDP growth experiences an increase in the first two quarters and also reduces afterwards. Crude oil price shocks to the Ghanaian economy follow the conventional behaviour of the impact of crude oil on macroeconomic indicators. The positive impact of the price shock on GDP growth and exchange rate is not much reflecting the fact that Ghana is an emerging oil-producing country with low production and export level. Ghana's prospects in the oil and gas sector should not just be a mere hoax. Policies should be directed toward petroleum exploration and production efforts since the energy transition endanger benefits for future exploitation. Policies should be implemented to attract competitive players locally and internationally in the oil industry. The shock of crude oil prices is beginning to show evidence based on this study. Therefore government must consider recognising the importance of other economic sectors in order not be become heavily dependent on oil.

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Section: Impact Of Crude Oil Pricementioning

confidence: 53%

Structural Vector Autoregressive Analysis of Crude Oil Price Shocks on Ghana’s Economy

Osman

Sebu

Iledare

et al. 2023

UJFE

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“…Higher oil prices lead to lower inflation in these countries (Samir et al , 2019). On the contrary, higher oil prices can adversely impact the inflation rate in oil-importing countries, as it enhances the higher cost of production and cost of living (Trang et al , 2017; Long and Liang, 2018; Chen et al , 2019; Sultan et al , 2020; Zakaria et al , 2021). Table 1 reports a summary of reviewed studies regarding the pass-through of oil price shocks on inflation.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic path through of oil price shocks into inflation in Iran: application of Markov switching and TVP-VAR models

Rafei

Mamipour

Bahari

2022

IJESM

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Purpose The main purpose of this paper is to investigate the dynamic effects of the oil price shocks on Iran’s inflation in the period 1993:2–2018:2 Design/methodology/approach The main purpose of this paper is to investigate the dynamic effects of the oil price shocks on Iran’s inflation in the period 1993:2–2018:2 using the time-varying parameter vector autoregressive (TVP-VAR) model. The dynamics of the results enable us to study the amount and severity of the impact of the oil price shocks on inflation with the distinction of the sanctioned and non-sanctioned periods. The volume of oil export is used to identify the effective oil sanctions. The period is divided into sanctioned and non-sanctioned periods by Markov switching model. Findings The results show that the pass-through of oil price shocks into Iran’s inflation are time-varying, and there are significant differences at sanction period from other time horizons. An increase in oil price has a positive effect on inflation and its effects are stronger during the sanctions period. It is also observed that the producer price index is more sensitive to changes in the oil price than the consumer price index. The necessity of the government’s earnest efforts to improve international relations to lift the sanctions, along with diversification of exports, and making the economy of Iran independent of oil revenues is obvious. Originality/value In addition to the exogenous oil price shocks, Iran’s economy faces numerous restrictions for its oil exports due to the sanctions. The main purpose of this paper is to investigate the dynamics effects of the oil price shocks on Iran’s inflation in the period 1993:2–2018:2 using the time-varying parameter vector autoregressive (TVP-VAR) model. The dynamics of the results enable us to study the amount and severity of the impact of the oil price shocks on inflation with the distinction of the sanctioned and non-sanctioned periods. The volume of oil export is used to identify the effective oil sanctions.

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“…In the literature, the effect of oil prices on various macroeconomic variables has been well established. Studies by Siddiqui et al (2020), Sultan et al (2020) and Nusair and Olson (2021), among others, scrutinised the nexus between oil prices and interest rates, inflation and economic growth. Oil prices and (un)employment are investigated by Michieka and Gearhart (2019) and Nusair (2020), while works by Ahad and Anwer (2020) and Jibril et al (2020) look at the relationship from the angle of trade and balance of payment.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric relationship between oil prices and remittances in oil‐importing and ‐exporting countries: Evidence from sub‐Saharan Africa

Dada

Akinlo²

2022

OPEC Energy Review

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This study investigated the asymmetric impact of oil price on remittances in oil‐exporting and ‐importing nations in sub‐Saharan Africa (SSA). The study adopted the nonlinear autoregressive distributed lag (NARDL) technique for 22 SSA countries. The study found that in oil‐importing countries, positive shocks in oil prices boost the influx of remittances, whereas a fall in oil prices reduces remittances. For oil‐exporting nations, the result indicates that the influence of a positive shock in oil price on remittances, in the long‐run, is sensitive to the measure of oil price (Brent and West Texas Intermediate). However, in the short‐run, adverse oil price shocks decrease the inflow of oil‐importing nations' remittances while it enhances the inflow of remittances into oil‐exporting nations. Based on these findings, the study recommends that oil‐importing nations use the increase in remittances to promote economic activities to lessen the adverse effect of an upsurge in international oil prices. By contrast, oil‐exporting nations need to use the rise in oil revenue to cushion the decrease in remittances due to oil price shock.

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Empirical Investigation of Relationship Between Oil Price and Inflation: The Case of India

Cited by 10 publications

References 18 publications

Structural Vector Autoregressive Analysis of Crude Oil Price Shocks on Ghana’s Economy

Structural Vector Autoregressive Analysis of Crude Oil Price Shocks on Ghana’s Economy

Dynamic path through of oil price shocks into inflation in Iran: application of Markov switching and TVP-VAR models

Asymmetric relationship between oil prices and remittances in oil‐importing and ‐exporting countries: Evidence from sub‐Saharan Africa

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