Asymmetrical relationship between oil price shocks and trade deficit: Evidence from Pakistan

Muhammad Ahad () and Zaheer Anwer ()

The Journal of International Trade & Economic Development, 2020, vol. 29, issue 2, 163-180

Abstract: This study investigates the asymmetric impact of oil price shocks on trade deficit for Pakistan economy, using NonLinear ARDL analysis, over the period of 1990QI-2016QIV. The estimation results confirm the presence of nonlinearity in the series. The bound testing approach also establishes the existence of asymmetric relationship between trade deficit and oil price movements. We find that increase (decrease) in oil prices and wholesale prices and decrease (increase) in industrial product results in a significant increase (decrease) in trade deficit. The adjustment pattern, using dynamic multipliers, reveals that the new long-run equilibrium for oil prices can be archived after 1 year and 2 months, wholesale prices by 3 years and 8 months and for industrial growth in 6 years and 6 months. This paper has important policy implications for Pakistani decision-makers.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://hdl.handle.net/10.1080/09638199.2019.1655782 (text/html)
Access to full text is restricted to subscribers.

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:taf:jitecd:v:29:y:2020:i:2:p:163-180

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199.2019.1655782

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().