The Impact of Oil Shocks on Qatar’s GDP

Al-mulali, Usama and Che Sab, Che Normee (2010): The Impact of Oil Shocks on Qatar’s GDP.

Abstract

This study examines the impact of oil shocks on Qatar’s gross domestic product using time series data from the period 1970-2007 covering all the oil shocks. The Johansen-Juselius (JJ) cointegration test and VECM Granger causality test are employed in this study. From the results we concluded that oil price has a positive effect on Qatar’s gross domestic product, but at the expense of higher inflation. Qatar seems to have suffered from financial surpluses and rapid economic growth caused by sharp increases in the oil price. At the same time, with a fixed exchange regime and tight monetary policy to deal with these events, this has caused the price of assets to increase sharply, leading to high levels of inflation in Qatar. Based on the results, we recommend that the Qatari currency (riyal) be pegged to a basket of currencies so as to increase the role of monetary policy to deal with the external shocks (oil shocks).

• Item Type: MPRA Paper
• Language: English
• Keywords: Qatar,Oil Shocks,GDP,VAR model
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy

References

Al-Abri, A., (2008). ‘Oil-price shocks and macroeconomic adjustments: Does the exchange rate regime matter?’, Social Science Research Network (SSRN), Working Paper Series, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=978363.

Amano, R., (1998). ‘Oil prices and the rise and fall of the US real exchange rate’, Journal of International Money and Finance, vol. 26, pp. 299-316.

Anzuini, A., (2007). ‘Oil supply news in a VAR: Information from financial markets’, Social Science Research Network (SSRN), Working Paper Series No 632.

Baumeister, C., et. al. (2008). ‘Time-varying effects of oil supply shocks on the US’, Social Science Research Network (SSRN), Working Paper Series, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1093702.

Bjّrnland, H., (1996). ‘Sources of business cycles in energy producing economies –The case of Norway and United Kingdom’, Working Paper Series, http://ideas.repec.org/p/ssb/dispap/179.html.

Bjørnland, H., (2008) ‘Oil price shocks and stock market booms in an oil exporting country’, Scottish Journal of Political Economy, vol. 56, pp. 232-254.

Chang, Y., (2003). ‘Oil price fluctuations and Singapore economy’, Energy Policy, vol. 34, pp. 1151–1165.

Cristina, M., (2005). ‘The effects of oil price shocks on the Philippine economy: A VAR approach’, Social Science Research Network (SSRN), vol. 50, pp. 3-59.

Cunado, J., (2003). ‘Do oil price shocks matter? Evidence for some European countries’, Journal of Energy Economics, vol. 41, pp. 137–154.

Eltony, M., (2002). ‘Oil price fluctuations and their impact on the macroeconomic variables of Kuwait: A case study using VAR model for Kuwait’, International Journal of Energy Research, vol. 25, pp. 939-959.

Ferderer, J., (1990). ‘Oil price volatility and the macroeconomy’, Journal of Macroeconomics, vol. 20, pp.1-26.

Garratt, A., (2003). ‘Long run structural macroeconometric model of the UK’, The Economic Journal, vol. 45, pp. 412–455.

Gisser, M., (1986). ‘Crude oil and the macroeconomy: Test of some popular nations’, Journal of Money, Credit and Banking, vol. 18, pp. 95-103.

Gounder, R., & Bartleet, M., (2007). ‘Oil price shocks and economic growth: Evidence for New Zealand - 2006’, Working Paper Series, https://editorialexpress.com/cgi-bi/.../download.cgi?db_name.

Gujarati, D.N. & Porter, D.C. (2009). Basic Econometrics, 5th edition, McGraw-Hill

Hamilto, J., (1983). ‘Oil and the macroeconomy since World War II’, Journal of Political Economy, vol. 91, pp. 228-248.

Hooker, M., (1996). ‘Oil prices and the rise and fall of the US real exchange rate’, Journal of Monetary Economics, vol. 25, pp. 195-213.

Huntington, G., (2004). ‘Shares, gaps and the economy’s response to oil disruptions’, Energy Economics, vol. 52, pp. 415-424.

Ito, K., (2008).‘Oil price and macroeconomy in Russia’, Economics Bulletin, vol. 17, pp. 1-9.

Jbir, R., (2009). ‘Recent oil price shock and Tunisian economy’, Energy Policy, vol. 37, pp.1041–105.

Kumar, S., (2005). ‘The macroeconomic effects of oil price shocks: Empirical evidence for India’, Economics Bulletin, vol. 29, pp. 15-37.

María, A., (2007). ‘Oil price shocks, systematic monetary policy and the Great Moderation’, Macroeconomic Dynamics, vol. 13, pp. 107- 137.

Mehrara Oskoui, K., (2006). ‘The sources of macroeconomic fluctuations in oil exporting countries: A comparative study’ Economic Modeling, vol 29, pp. 365–379.

Omisakin, A., (2008). ‘Oil price shocks and the Nigerian economy’, Med Well Journal, vol. 42, pp.1-7.

Farzanegan, M., (2007). ‘The effects of oil price shocks on the Iranian economy’, Energy Economics, vol. 31, pp. 134–151.

Robalo, P. Salvado, J., (2008). ‘Oil price shocks and the Portuguese economy since the 1970s’, Social Science Research Network (SSRN), FEUNL Working Paper Series, No. 529.

Sánchez, M., (2008). ‘Oil shocks and endogenous markups: Results from an estimated Euro Area DSGE model’, Social Science Research Network (SSRN), ECB Working Paper No. 860.

Weiqi, T., (2009). ‘Oil price shocks and their short- and long-term effects on the Chinese economy’, Energy Economics, vol. 32, pp. 3–14.