Oil prices and Malaysian economy

Abd Jalil, Norasibah and Mat Ghani, Gairuzazmi and Duasa, Jarita (2009) Oil prices and Malaysian economy. International Review of Business Research Papers, 5 (4). pp. 232-256. ISSN 1837-5685

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Abstract

This paper studies the impact of oil prices on GDP in Malaysia. In particular, three types of oil prices; world oil price (PW), world oil price in domestic currency (PWD), and domestic oil price (PD) are tested against the GDP within VAR framework. Based on the findings, change in PD oil price appears to have the most pronounced effect to the GDP. It is because, significant results of PD analysis are documented both in short-run and long-run tests. In the asymmetric test, significant result is documented in PD analysis only. The finding signifies the presence of asymmetric relationship between oil price changes and the economy. With these evidences we conclude that, policymakers may consider using PD oil price as a policy tool in the case oil price increase strikes again in the future. In the event policymakers are faced with policy options of either to increase or decrease the oil price, they should be aware that oil price decrease gives significant effect to the economy than oil price increase.

Item Type:	Article (Journal)
Additional Information:	2565/11258
Uncontrolled Keywords:	Macroeconomics
Subjects:	H Social Sciences > HB Economic Theory
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Gairuzazmi Mat Ghani
Date Deposited:	30 Jan 2012 11:28
Last Modified:	30 Jan 2018 10:55
URI:	http://irep.iium.edu.my/id/eprint/11258

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