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Working Paper Series - Oil Price Fluctuations and their Impact on the Macroeconomic Variables of Kuwait:



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Oil Price Fluctuations and their Impact on the Macroeconomic Variables of Kuwait:


Volume : 0

No : 0

ISSN : WPS9908

Publisher : Arab Planning Institute - Kuwait

Author (s) : M. Nagy Eltony 

Published Date : 1/1/1999


Contents :
Oil price fluctuations area major source of disturbance for the economies of oil producing countries. Inthis study, a vector Autoregression Model, Vector Error Correction Model andStructure VAR Model were all estimated using seven key macroeconomic variablesfor state of Kuwait.A quarterly data were for the period 1984:1 ? 1998:4 for those seven variableswhich were used to estimate the various models.
All three estimated models indicate a high degree of interrelation betweenmajor macroeconomic variables. The results also highlighted the causalityrunning from the oil prices and oil revenues, and government development andcurrent expenditure, towards other variables. The most striking result is thatgovernment fiscal stimuli is the main determinant of domestic prices, whilemonetary stimuli have the least results. The policy implication of this is thatfiscal policy can be used more effectively to stabilize the domestic economyafter an oil shock.

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