Crude Oil Price, Monetary Policy and Output: The Case of Pakistan

Afia Malik

The Pakistan Development Review, 2008, vol. 47, issue 4, 425-436

Abstract: This paper has analysed the impact of rising crude oil prices on output. Crude oil prices and real output are found to be strongly related, and this relationship has a bellshape. That is, when crude oil prices are below the critical level (i.e., 22 $s/bbl), the relationship between crude oil prices and real output is positive; whereas when the crude oil price rises and exceeds that critical level the relationship becomes negative. Moreover, high debt-GDP ratio, high deficit spending, and high real effective exchange rate would have a negative impact on output. While the existence of foreign exchange reserves and capital investment would cause output to rise.

Keywords: Oil Prices; Output; Pakistan; Macroeconomy (search for similar items in EconPapers)
JEL-codes: E52 Q43 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (14)

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