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Oil price volatility and macroeconomic determinants of growth: evidence from Morocco

Azzi, Abdelkebir and Masih, Mansur (2018): Oil price volatility and macroeconomic determinants of growth: evidence from Morocco.

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Abstract

Oil prices in the global market is usually found to be correlated with the economic growth of an economy. In this study, we make an attempt to investigate whether there is any significant relationship between oil prices and macroeconomic variables taking Morocco as a case study. We use the standard time series techniques such as, co-integration, long run structural modeling, vector error correction, and variance decompositions. We found a significant statistical relationship existing between inflation, oil price, trade balance, interest rate, and economic growth, whereby oil price and interest rate are significant macroeconomic variables on the economic growth of Morocco in the long run; and inflation and trade balance are significant on the economic growth in the short run. Oil price was found to have no impact on the economic growth in the short run. We also found evidence that exchange rate was insignificant. The results appear to be plausible and contain strong policy implications.

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