The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran

Komijani, Akbar and Gandali Alikhani, Nadiya and Naderi, Esmaeil (2012): The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran. Published in: International Journal of Energy Economics and Policy , Vol. 3, No. 1 (1 January 2013): pp. 43-50.

Abstract

Substituting crude oil exports with value-added petrochemical products is one of the main strategies for policy makers in oil-driven economies to isolating the real sectors of economy from oil price volatility. This policy inclination has led to a body of literature in energy economics in recent decades. As a case study, this paper investigates the short-run and long-run relationship between Iran’s oil price and methanol price which is one of the most important non-oil exports of the oil-exporting country. To do so, the weekly data from 18 Jan. 2009 to 18 Sep. 2011 in a VECM framework is applied. The results show that in the long-run, oil price hikes leads to proportional increase in methanol price while in the short-run, this impact is not significant.

• Item Type: MPRA Paper
• Language: English
• Keywords: Crude Oil, Methanol, VECM Model
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy

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