The Oil Price and Trade Nexus in the Gulf Co-Operation Council Countries

Tarek Tawfik Yousef Alkhateeb and Haider Mahmood
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Tarek Tawfik Yousef Alkhateeb: College of Business Administration, Prince Sattam bin Abdulaziz University, 173, Alkharj 11942, Saudi Arabia
Haider Mahmood: College of Business Administration, Prince Sattam bin Abdulaziz University, 173, Alkharj 11942, Saudi Arabia

Resources, 2020, vol. 9, issue 12, 1-19

Abstract: The present study investigates the asymmetrical impacts of oil prices and real exchange rates on the trade balances in the Gulf Co-operation Council countries. Using panel estimates, we found the symmetrical positive effect from the oil prices and the asymmetrical positive effect from the real exchange rates on the trade balances. For country-specific results, increasing oil prices showed a positive effect on the trade balances in Oman, Saudi Arabia, and the UAE and a negative effect in Kuwait. Decreasing oil prices carried a positive relationship with the trade balances in Bahrain, Oman, Qatar, and the UAE. The oil prices showed an asymmetrical impact on the trade balances in all countries, except Saudi Arabia. Moreover, the depreciation helped to improve the trade balances in Bahrain, Oman, Qatar, and the UAE. The appreciation worsened the trade balances in Oman, the UAE, and Saudi Arabia and improved the trade balance in Kuwait. Moreover, the asymmetrical relationships between the real exchange rates and the trade balances were corroborated in all of the investigated countries.

Keywords: trade balances; real exchange rates; oil prices; asymmetry (search for similar items in EconPapers)
JEL-codes: Q1 Q2 Q3 Q4 Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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