ON ASYMMETRIC CAUSAL RELATIONSHIPS IN PETROPOLITICS

Feyza Balan

Economic Annals, 2016, vol. 61, issue 209, 7 - 26

Abstract: The aim of this paper is to examine whether the First Law of Petropolitics denominated by Friedman in 2006 is valid for OPEC countries. To do this, this paper analyses the relationship between political risk and oil supply by applying the asymmetric panel causality test suggested by Hatemi-J (2011) to these countries for the period 1984-2014. The results show that the First Law of Petropolitics is valid for Angola, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and the UAE, given that positive oil supply shocks significantly lead to negative political stability shocks, and negative oil supply shocks significantly lead to positive shocks in political stability.

Keywords: Political risk; oil prices; asymmetric panel causality test; OPEC (search for similar items in EconPapers)
JEL-codes: C33 O57 P48 Q41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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