The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia
This study aims to analyze the impact of oil shocks on the external balance of Saudi Arabia, as one of the largest net oil-exporting countries. To this end, a time-varying parameter vector autoregression model (TVP-VAR) is estimated by using quarterly data covering the period between 1991: Q1 and 20...
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MDPI AG
2023-04-01
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| Series: | Resources |
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| Online Access: | https://www.mdpi.com/2079-9276/12/5/54 |
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| author | Mohamad Husam Helmi Mohammed I. Abu Eleyan Abdurrahman Nazif Çatık Esra Ballı |
| author_facet | Mohamad Husam Helmi Mohammed I. Abu Eleyan Abdurrahman Nazif Çatık Esra Ballı |
| author_sort | Mohamad Husam Helmi |
| collection | DOAJ |
| description | This study aims to analyze the impact of oil shocks on the external balance of Saudi Arabia, as one of the largest net oil-exporting countries. To this end, a time-varying parameter vector autoregression model (TVP-VAR) is estimated by using quarterly data covering the period between 1991: Q1 and 2021: Q4. We find that identifying the source of shocks plays an important role in understanding the time-varying impact of shocks on its economy. Our findings indicate that the global oil production shocks excluding Saudi Arabia have a negative and significant impact on the trade balance and are greater than the impact of the Saudi oil production shocks, which is not significant for most of the period. In addition, we found that oil price shocks have more profound and much greater impacts than global and domestic oil supply shocks. This may be attributed to the fact that oil price shocks are more than oil supply shocks, and supply shocks are linked to oil price shocks. However, impulse responses show that the effects of oil shocks are volatile over time and their effects are generally more pronounced during and immediately after global shocks. Our findings have serious implications for the trade balance of Saudi Arabia, particularly in the low and volatile oil price environment. |
| first_indexed | 2024-03-11T03:21:43Z |
| format | Article |
| id | doaj.art-b79f6ab4057b494ca7c221aaebb90374 |
| institution | Directory Open Access Journal |
| issn | 2079-9276 |
| language | English |
| last_indexed | 2024-03-11T03:21:43Z |
| publishDate | 2023-04-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Resources |
| spelling | doaj.art-b79f6ab4057b494ca7c221aaebb903742023-11-18T03:08:57ZengMDPI AGResources2079-92762023-04-011255410.3390/resources12050054The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi ArabiaMohamad Husam Helmi0Mohammed I. Abu Eleyan1Abdurrahman Nazif Çatık2Esra Ballı3General Education and Foundation Program, Rabdan Academy, Abu Dhabi 22401, United Arab EmiratesIndependent Researcher, 35040 Izmir, TurkeyDepartment of Economics, Faculty of Economics and Administrative Sciences, Ege University, 35040 Izmir, TurkeyDepartment of Economics, Erzincan Binali Yıldırım University, 24002 Erzincan, TurkeyThis study aims to analyze the impact of oil shocks on the external balance of Saudi Arabia, as one of the largest net oil-exporting countries. To this end, a time-varying parameter vector autoregression model (TVP-VAR) is estimated by using quarterly data covering the period between 1991: Q1 and 2021: Q4. We find that identifying the source of shocks plays an important role in understanding the time-varying impact of shocks on its economy. Our findings indicate that the global oil production shocks excluding Saudi Arabia have a negative and significant impact on the trade balance and are greater than the impact of the Saudi oil production shocks, which is not significant for most of the period. In addition, we found that oil price shocks have more profound and much greater impacts than global and domestic oil supply shocks. This may be attributed to the fact that oil price shocks are more than oil supply shocks, and supply shocks are linked to oil price shocks. However, impulse responses show that the effects of oil shocks are volatile over time and their effects are generally more pronounced during and immediately after global shocks. Our findings have serious implications for the trade balance of Saudi Arabia, particularly in the low and volatile oil price environment.https://www.mdpi.com/2079-9276/12/5/54oil price shocksoil supply shockstrade balancemacroeconomicsTVP-VARSaudi Arabia |
| spellingShingle | Mohamad Husam Helmi Mohammed I. Abu Eleyan Abdurrahman Nazif Çatık Esra Ballı The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia Resources oil price shocks oil supply shocks trade balance macroeconomics TVP-VAR Saudi Arabia |
| title | The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia |
| title_full | The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia |
| title_fullStr | The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia |
| title_full_unstemmed | The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia |
| title_short | The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia |
| title_sort | time varying effects of oil shocks on the trade balance of saudi arabia |
| topic | oil price shocks oil supply shocks trade balance macroeconomics TVP-VAR Saudi Arabia |
| url | https://www.mdpi.com/2079-9276/12/5/54 |
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