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OIL PRICE SHOCKS AND INDUSTRY LEVEL PRODUCTION USING VECTOR AUTOREGRESSION: EMPIRICAL EVIDENCE FROM PAKISTAN

Farhan Ahmed, Muhammad Osama Daudpota and Muhammad Kashif

Global Journal of Business Research, 2017, vol. 11, issue 3, 13-25

Abstract: Industrial production is one of the leading indicators of gross domestic product and economic growth of the country. These factors exhibit the holistic enactment of any economy. Alternatively, the fluctuations in the industrial production level lead to contraction or expansion within the economy. Therefore, changes in prices of oil are the crucial inputs to the overall industrial production. This study examines the effects of oil prices shocks on the industrial production in Pakistan during the period July 2000-June 2015 by using VAR model. This research has shown that oil price shocks had a negative impact on industrial production in Pakistan to some extent. It is recommended to forecast oil prices for future that can help take precautionary steps to be flexible enough to control the impact on an industrial production level

Keywords: Prices; Industrial Level Production; Granger Causality; Variance Decomposition (search for similar items in EconPapers)
JEL-codes: E30 (search for similar items in EconPapers)
Date: 2017
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