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New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates

Oil is used as an essential source of energy because it is one of the significant inputs of production especially in manufacturing sectors. This study employs symmetric and asymmetric Autoregressive Distributed Lag Model to explore oil price effect on manufacturing output over 1985-2017 in Saudi Ara...

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Main Authors: Muhammad, Faheem, Mohamed, Azali, Lee, Chin, Mazlan, Nur Syazwani
Format: Article
Language:English
Published: Johar Education Society 2020
Online Access:http://psasir.upm.edu.my/id/eprint/86895/1/New%20evidence%20of%20oil%20price%20fluctuations%20and.pdf
http://psasir.upm.edu.my/id/eprint/86895/
https://www.econstor.eu/handle/10419/216873
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spelling my.upm.eprints.868952022-01-03T04:00:11Z http://psasir.upm.edu.my/id/eprint/86895/ New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates Muhammad, Faheem Mohamed, Azali Lee, Chin Mazlan, Nur Syazwani Oil is used as an essential source of energy because it is one of the significant inputs of production especially in manufacturing sectors. This study employs symmetric and asymmetric Autoregressive Distributed Lag Model to explore oil price effect on manufacturing output over 1985-2017 in Saudi Arabia, Kuwait and United Arab Emirates. The results of the linear model show that oil price effect manufacturing output negatively in short-run and long-run. The detection of asymmetric behavior of oil price in linear ARDL model show insufficient ability, and this study further estimated the model through the non-linear model and decompose oil price into positive and negative changes. In the non-linear model, the results show that negative oil price changes encourage manufacturing output, while the positive oil price hurts manufacturing output. The study also apply the Granger causality test, and results show one-way causality from oil price to manufacturing output in Saudi Arabia and Kuwait. Based on the findings, the government officials of these countries should take steps in shifting these economies from huge extraction of oil and concentrate on manufacturing, and policymakers should understand the linkage of oil price with manufacturing sector for diversification of theireconomy and escape from Dutch Disease. Johar Education Society 2020 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/86895/1/New%20evidence%20of%20oil%20price%20fluctuations%20and.pdf Muhammad, Faheem and Mohamed, Azali and Lee, Chin and Mazlan, Nur Syazwani (2020) New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates. Pakistan Journal of Commerce and Social Science, 14 (1). 300 - 333. ISSN 1997-8553; ESSN: 2309-8619 https://www.econstor.eu/handle/10419/216873
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Oil is used as an essential source of energy because it is one of the significant inputs of production especially in manufacturing sectors. This study employs symmetric and asymmetric Autoregressive Distributed Lag Model to explore oil price effect on manufacturing output over 1985-2017 in Saudi Arabia, Kuwait and United Arab Emirates. The results of the linear model show that oil price effect manufacturing output negatively in short-run and long-run. The detection of asymmetric behavior of oil price in linear ARDL model show insufficient ability, and this study further estimated the model through the non-linear model and decompose oil price into positive and negative changes. In the non-linear model, the results show that negative oil price changes encourage manufacturing output, while the positive oil price hurts manufacturing output. The study also apply the Granger causality test, and results show one-way causality from oil price to manufacturing output in Saudi Arabia and Kuwait. Based on the findings, the government officials of these countries should take steps in shifting these economies from huge extraction of oil and concentrate on manufacturing, and policymakers should understand the linkage of oil price with manufacturing sector for diversification of theireconomy and escape from Dutch Disease.
format Article
author Muhammad, Faheem
Mohamed, Azali
Lee, Chin
Mazlan, Nur Syazwani
spellingShingle Muhammad, Faheem
Mohamed, Azali
Lee, Chin
Mazlan, Nur Syazwani
New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
author_facet Muhammad, Faheem
Mohamed, Azali
Lee, Chin
Mazlan, Nur Syazwani
author_sort Muhammad, Faheem
title New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
title_short New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
title_full New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
title_fullStr New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
title_full_unstemmed New evidence of oil price fluctuations and manufacturing output in Saudi Arabia, Kuwait and United Arab Emirates
title_sort new evidence of oil price fluctuations and manufacturing output in saudi arabia, kuwait and united arab emirates
publisher Johar Education Society
publishDate 2020
url http://psasir.upm.edu.my/id/eprint/86895/1/New%20evidence%20of%20oil%20price%20fluctuations%20and.pdf
http://psasir.upm.edu.my/id/eprint/86895/
https://www.econstor.eu/handle/10419/216873
_version_ 1724075475566854144
score 13.211869

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