Oil Price And Economic Growth : An Empirical Study In Russia

Erokhia, Darian (2016) Oil Price And Economic Growth : An Empirical Study In Russia. [Final Year Project Report] (Unpublished)

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Abstract

This study attempts to examine the relationship between oil price and economic growth together with exchange rate and inflation rate in Russia. The time span covered by the series is from 1995:Q1 to 2014:Q4, giving 80 observations. The tests that have been employed in this study include unit root tests, namely Augmented Dickey-Fuller (ADF) test, Phillips-Perron (PP) test and KwiatkowskiPhillips-Schmidt-Shin (KPSS) test; cointegration test of Johansen and Juselius; Granger causality test based on Vector Error Correction Model (VECM) to investigate the long run and short run relationship; and both Variance Decomposition and Impulse Response Function to investigate the relationship beyond the sample. The empirical findings show the existence of relationship between the variables, oil prices not only affect economic growth, but also have the impact towards exchange rate and inflation rate. Furthermore, the results of short run Granger causality for the tested variables show the existence of unidirectional causality running from all the independent variables which are oil price, exchange rate, and inflation rate towards GDP. In addition, there is a casual relationship between GDP and other determinants beyond the sample.

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