The dynamics of energy prices and the Norwegian economy: A common trends and common cycles analysis

Puneet Vatsa and Hem C. Basnet

Resources Policy, 2020, vol. 68, issue C

Abstract: Considering the significance of the oil and gas sector to the Norwegian economy, this study investigates the short-term and long-term associations between crude oil and natural gas prices, and the real GDP of Norway. To this end, we employ a common-feature-based, multivariate trend-cycle decomposition approach to examine common trends and common cycles between them. Upon isolating the trend and cyclical components of the three series, this study finds a negative association between the real GDP and the two energy prices both in the short-run as well as in the long-run. This result contradicts the commonly-held view that the performance of energy-exporting economies is positively associated with energy prices. The test results also find that the cycles of natural gas prices follow the cycles of oil prices.

Keywords: Energy prices; Crude oil; Natural gas; Common trends and common cycles; Time-series; Norway (search for similar items in EconPapers)
JEL-codes: C32 F14 F31 F42 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:68:y:2020:i:c:s0301420720302920

DOI: 10.1016/j.resourpol.2020.101791

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