Oil Price Fluctuation and their Impact on the Macroeconomic Variables: The Case of Kuwait

Salah A. Alawadhi and Adedayo E. Longe
Additional contact information
Salah A. Alawadhi: Faculty of Business Studies, Arab Open University, Kuwait
Adedayo E. Longe: Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 3, 375-386

Abstract: The fluctuations in the international prices of crude oil have been a major concern for many economies who depend mainly on oil exports. Oil price shocks are a major disturbance for the economies of oil producing countries. This study investigates the impact of oil price shocks on selected macroeconomic variables in Kuwait using secondary data covering the period of 2001 to 2022. The study adopted the Vector autoregression (VAR) method to analyze the response of Kuwait macroeconomic variables to shocks in oil prices. Oil price in the study is considered in 2 categories: the linear oil price and the non-linear oil price (positive and negative changes in oil price). Based on the findings, it is observed that oil price shocks significantly impact macroeconomic variables in Kuwait. It is found that positive changes in oil prices have a more positive and significant impact on the macroeconomic variables compared to the negative changes in oil price. It is however concluded that there is a need for more policy developments to better harness periods of positive oil price experiences, and develop hedging risk framework for periods of negative changes in oil price in order to curb the impact of oil price shocks on Kuwait’s macroeconomy.

Keywords: Macroeconomic; Oil Price Shocks; Developing Economies; Kuwait; VAR Modelling (search for similar items in EconPapers)
JEL-codes: C23 F3 O2 Q43 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econjournals.com/index.php/ijeep/article/download/15713/7914 (application/pdf)
https://www.econjournals.com/index.php/ijeep/article/view/15713 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2024-03-38

Access Statistics for this article

International Journal of Energy Economics and Policy is currently edited by Ilhan Ozturk

More articles in International Journal of Energy Economics and Policy from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().