The Study of Oil Price Shocks on Economic Growth with Emphasis on the Role of Investment

Document Type : Original Article


1 Department of Energy Economics, Faculty of Economics, Allameh Tabatabai University

2 Department of Economics, Faculty of Economics, Allameh Tabatabai University


This study tries to examine the asymmetric effect of oil price fluctuations on economic growth, using the generalized method of moments (GMM) during the period 1992-2015 for oil Exporting Countries and oil-importing countries. The results show that oil shocks play an asymmetric role in the form of oil price fluctuations, and also the results of dynamic panel model suggest that for oil exporting countries, elasticity of economic growth to oil price fluctuations is elastic and positive. While the direct impact of oil price fluctuations on economic growth in oil importing countries is negative and inelastic, and by considering the effects of cross-investment and uncertainty channels, the total direct and indirect effects of oil price fluctuations on economic growth increase. In contrast for oil exporting countries, the marginal reaction of the economy to oil price fluctuations will not be great changes, which indicates economic growth has low dependence to oil prices.


-   Abrishami, H.Mehrara, M. Ghanimifard , H & Keshavaraian , M .(2006). The effect of oil price volatility on economic growth in some OECD countries by the non-linear definitude of oil prices. Knowledge and Development, 15(22), 11-27 (in Persian).
-   Alotaibi, B. (2006). Oil Price Fluctuations and the Gulf Cooperation Council (GCC) Countrie, 1960-2002. Southern Illinois University Carbondale.
-   Anver, C. S., Rajesh, & Acharya, H. (2015). Effects of energy price rise on investment: Firm level evidence from Indian manufacturing sector. Energy Economics, 49, 516–522.
-   Bernanke, B. S., Gertler, M. & Watson, M.W. (1997). Systematic Monetary Policy and the Effects of Oil Price Shocks. Brookings Papers on Economic Activity.
-   Berument , H. & Ceylan, N. B. (2005). The Impact of Oil Price Shocks on the Economic Growth of The Selected MENA Countries.Working Paper, Bilkent University.
-   Bidabad, B & Peykarju, K. (2006). Simulations and forecasts global oil prices. Economic Supplement to the Bulletin. 4, 83-117 (in Persian).
-   Ebrahimi, S. (2011). The effect of oil price shocks and exchange rate fluctuation and uncertainties resulting from the economic growth. Journal of Business Research, 53, 83-105 (in Persian).
-   Farzanegan, M. & Markwardt. G. (2007). The Effect of Oil Price Shocks on Iranian Economy. Energy Economics, 31, 134-151.
-   Fattahy,S., Sohaili, K. & Abdul Maliki, H (2014). The authorities, the uncertainty of oil prices and economic growth in Iran: evidence of asymmetric model M-MVGARCH. Journal of Economic Modeling Research, 17,  (in Persian).
-   Jahadi, M & Elmi, Z. (2011). Oil prices and economic growth (evidence of OPEC). Preceding studies Journal of Economic Growth and Development, 1(2), 11-40 (in Persian).
-   Manera, M. & Cologni, A. (2005). Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries. University of Milan-Bicocca, Italy, FEEM Working Paper No. 101.
-   Nelson, D.B. (1991). Conditional Heteroskedasticity in Asset Returns: A New Approach. Econometrica, 59, 347–370.
-   Noferesti, M. & Karami, Y. (2015). Effect of changes in the international value of the dollar and oil prices on the trade balance and economic growth: analytical framework of a structural macro-econometric modelling. Journal of Economics and Modellnig, 19-20, 111-142 (in Persian).
-   Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, 61, 653–70.
-   Polterovich, V., Popov. V. & Tonis, A. (2010). Resource abundance: A curse or blessing?. ST/ESA/2010/DWP/93, DESA Working Paper No.93.
-   Rahman, S. & Serletis, A. (2010). The asymmetric effects of oil price and monetary policy shocks: A nonlinear VAR approach. Energy Economics, 32(6), 1460- 1466 (in Persian).
-   World Bank. (2014). World Development Indicators.