Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model
Based on a VAR framework, Granger Causality Tests, Impulse Response Function and Variance Decomposition analysis on the annual data from 1970 to 2021, This study aims to demonstrate the effect of oil price fluctuations on GDP, imports, international reserves, and exports in Iraq. The Granger causal...
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EconJournals
2024-05-01
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| Series: | International Journal of Energy Economics and Policy |
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| Online Access: | https://www.econjournals.com.tr/index.php/ijeep/article/view/15681 |
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| author | Maitham A. Rodhan |
| author_facet | Maitham A. Rodhan |
| author_sort | Maitham A. Rodhan |
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Based on a VAR framework, Granger Causality Tests, Impulse Response Function and Variance Decomposition analysis on the annual data from 1970 to 2021, This study aims to demonstrate the effect of oil price fluctuations on GDP, imports, international reserves, and exports in Iraq. The Granger causality results demonstrated a unidirectional connection moving from oil price to imports, exports, international reserves, and GDP, this is an inevitable result because oil prices are determined in the international markets according to specific factors that do not include local economic variables. The variance decomposition result indicated that oil price changes are an important source of variation in the studied variables. Finally, the results of the impulse response function indicated that fluctuations in oil prices significantly impact GDP, exports, imports, and international reserves in Iraq. Therefore, we suggest that economic policymakers work seriously to develop practical plans to diversify the Iraqi economy instead of relying too heavily on oil revenues, which are characterized by sharp and continuous volatility, to avoid the negative effects of these fluctuations on the main macroeconomic variables in Iraq.
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| format | Article |
| id | doaj-art-dbd5c5245ed24b3d814bb2e0691a022a |
| institution | Kabale University |
| issn | 2146-4553 |
| language | English |
| publishDate | 2024-05-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Energy Economics and Policy |
| spelling | doaj-art-dbd5c5245ed24b3d814bb2e0691a022a2024-12-27T01:04:40ZengEconJournalsInternational Journal of Energy Economics and Policy2146-45532024-05-0114310.32479/ijeep.15681Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive ModelMaitham A. Rodhan0Department of Oil and Gas Economics, Basrah University for Oil and Gas, Basrah, Iraq; & Institute of Economics, Corvinus University of Budapest, Budapest, Hungary Based on a VAR framework, Granger Causality Tests, Impulse Response Function and Variance Decomposition analysis on the annual data from 1970 to 2021, This study aims to demonstrate the effect of oil price fluctuations on GDP, imports, international reserves, and exports in Iraq. The Granger causality results demonstrated a unidirectional connection moving from oil price to imports, exports, international reserves, and GDP, this is an inevitable result because oil prices are determined in the international markets according to specific factors that do not include local economic variables. The variance decomposition result indicated that oil price changes are an important source of variation in the studied variables. Finally, the results of the impulse response function indicated that fluctuations in oil prices significantly impact GDP, exports, imports, and international reserves in Iraq. Therefore, we suggest that economic policymakers work seriously to develop practical plans to diversify the Iraqi economy instead of relying too heavily on oil revenues, which are characterized by sharp and continuous volatility, to avoid the negative effects of these fluctuations on the main macroeconomic variables in Iraq. https://www.econjournals.com.tr/index.php/ijeep/article/view/15681Macroeconomic Variables, VAR Model, Oil Price Shocks, Iraq |
| spellingShingle | Maitham A. Rodhan Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model International Journal of Energy Economics and Policy Macroeconomic Variables, VAR Model, Oil Price Shocks, Iraq |
| title | Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model |
| title_full | Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model |
| title_fullStr | Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model |
| title_full_unstemmed | Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model |
| title_short | Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model |
| title_sort | macroeconomic impacts of oil price shocks evidence from iraq by using vector autoregressive model |
| topic | Macroeconomic Variables, VAR Model, Oil Price Shocks, Iraq |
| url | https://www.econjournals.com.tr/index.php/ijeep/article/view/15681 |
| work_keys_str_mv | AT maithamarodhan macroeconomicimpactsofoilpriceshocksevidencefromiraqbyusingvectorautoregressivemodel |