A STUDY ON CAUSAL RELATIONSHIP BETWEEN PRODUCTION, PRICE, EXPORT AND STOCK LEVEL OF PALM OIL IN MALAYSIA

Mariana, Ab Manan (2014) A STUDY ON CAUSAL RELATIONSHIP BETWEEN PRODUCTION, PRICE, EXPORT AND STOCK LEVEL OF PALM OIL IN MALAYSIA. [Final Year Project Report] (Unpublished)

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Abstract

The study aims to investigate the relationship between productions, price, export and the stock level of palm oil in Malaysia for the period of 1981 to 2013. There were four methods used in this study, which are; Augmented Dickey-Fuller (ADF) Test, Phillips-Perron (PP) Test, Johansen and Juselius Cointegration Test, and further VEC Granger causality test were used. The empirical results show that, all the variables used in this study were stationary at first difference and there is one cointegration exist in the model. The VEC Granger causality test shows that, only production can directly affected the stock level of palm oil, whereas, stock level of palm oil can directly affect all the independent variables which are the production, price and export of palm oil. Indirectly, the price and export of palm oil can affect the stock level of palm oil for both of the variables have direct affect to palm oil production which it later affect the stock level of palm oil. The results of VEC Granger causality test also shows that only production has a long run relationship with the stock level of palm oil. The empirical findings of this study are useful for the palm oil producers and government to evaluate strategies and policies regarding the stock level management.

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