The Survey of Impact of Oil Price Fluctuations on Real Exchange Rate in the Selected OPEC Countries

Hossein-Ali Fakher (), Zahra Abedi and Mostafa Panahi
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Hossein-Ali Fakher: Department of energy economy, Faculty of Environment and Energy, Science and Research branch, Islamic Azad University, Tehran, Iran.
Zahra Abedi: Department of Environmental Economics and Energy, Graduate School of the Environment and Energy, Science and Research Branch, Islamic Azad University, Tehran, Iran.
Mostafa Panahi: Department of Environmental Economics and Energy, Graduate School of the Environment and Energy, Science and Research Branch, Islamic Azad University, Tehran, Iran.

Iranian Economic Review (IER), 2014, vol. 18, issue 3, 69-86

Abstract: One of the most significant discussion and challenges propounded in the macroeconomics is the effects of fluctuations of exchange rate on the macroeconomic variables (production, employment, inflation and … etc).In this direction, the important and noticeable point is the factors which lead to fluctuations in the exchange rate which, from amongst these factors as an example, is fluctuations in the oil price. For this reason, relationship between oil price fluctuation and exchange rate seems to be important and necessary. Time period used in this study relates to the years from 1990 to 2010. Also, Autoregressive Distributed Lag Model (ARDL) has been used to study relationship among the variables. Results obtained from this study show the negative and significant effect of oil price fluctuations on the exchange rate. A negative and significant quantity was obtained from ECM coefficient, and this problem represents activeness of the model from short-term to long-term. The oil price changes have left asymmetrical effects on the countries in the short term, and these effects will continue in the long term as well. Of course, direction of short term effects, contrary to the long term effects, is in each level.

Keywords: Oil Price Fluctuation; Real Exchange Rate; AutoRegressive Distributed Lag Model (ARDL). (search for similar items in EconPapers)
Date: 2014
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