The Time-Varying Effects of Oil Shocks on the Trade Balance of Saudi Arabia

Mohamad Husam Helmi, Mohammed I. Abu Eleyan, Abdurrahman Nazif Çatık and Esra Ballı
Additional contact information
Mohammed I. Abu Eleyan: Independent Researcher, 35040 Izmir, Turkey
Abdurrahman Nazif Çatık: Department of Economics, Faculty of Economics and Administrative Sciences, Ege University, 35040 Izmir, Turkey
Esra Ballı: Department of Economics, Erzincan Binali Yıldırım University, 24002 Erzincan, Turkey

Resources, 2023, vol. 12, issue 5, 1-18

Abstract: This study aims to analyze the impact of oil shocks on the external balance of Saudi Arabia, as one of the largest net oil-exporting countries. To this end, a time-varying parameter vector autoregression model (TVP-VAR) is estimated by using quarterly data covering the period between 1991: Q1 and 2021: Q4. We find that identifying the source of shocks plays an important role in understanding the time-varying impact of shocks on its economy. Our findings indicate that the global oil production shocks excluding Saudi Arabia have a negative and significant impact on the trade balance and are greater than the impact of the Saudi oil production shocks, which is not significant for most of the period. In addition, we found that oil price shocks have more profound and much greater impacts than global and domestic oil supply shocks. This may be attributed to the fact that oil price shocks are more than oil supply shocks, and supply shocks are linked to oil price shocks. However, impulse responses show that the effects of oil shocks are volatile over time and their effects are generally more pronounced during and immediately after global shocks. Our findings have serious implications for the trade balance of Saudi Arabia, particularly in the low and volatile oil price environment.

Keywords: oil price shocks; oil supply shocks; trade balance; macroeconomics; TVP-VAR; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: Q1 Q2 Q3 Q4 Q5 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2079-9276/12/5/54/pdf (application/pdf)
https://www.mdpi.com/2079-9276/12/5/54/ (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:gam:jresou:v:12:y:2023:i:5:p:54-:d:1132812

Access Statistics for this article

Resources is currently edited by Ms. Donchian Ma

More articles in Resources from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().