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Crude Oil Price and Real GDP Growth: An Application of ARDL Bounds Cointegration and Toda-Yamamoto Causality Tests

Clovis Miamo () and Elvis Achuo ()
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Clovis Miamo: University of Dschang

Economics Bulletin, 2021, vol. 41, issue 3, 1615-1626

Abstract: The main objective of this study is to examine the causality between crude oil price and real GDP growth in Cameroon using annual data spanning from 1980 to 2018. The study adopts the Autoregressive Distributed Lag (ARDL) modelling framework, as well as the Bounds and Toda-Yamamoto cointegration and causality tests. Results from the ARDL estimates reveal that crude oil price has a positive significant effect on real GDP growth. This effect is consistent both in the short-run and long-run. We verified the existence of long-run cointegration following the Bounds test while the direction of causality was established thanks to the Toda-Yamamoto causality test, which showed evidence of unidirectional causality running from real GDP to crude oil price. Consequently, the study recommends that it is necessary for the government to increase domestic investments in the oil sector, strengthen the country's refinery capacity, create strategic crude oil reserves and ensure a proper allocation and management of oil revenues

Keywords: Economic Growth; ARDL Model; Crude Oil Price (search for similar items in EconPapers)
JEL-codes: C1 O4 (search for similar items in EconPapers)
Date: 2021-09-17
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