Asymmetric impact of oil price on trade balance in BRICS countries: Multiplier dynamic analysis

Muhammad Ahad () and Zaheer Anwer ()

International Journal of Finance & Economics, 2021, vol. 26, issue 2, 2177-2197

Abstract: This paper examines the impact of oil prices on the trade balance by incorporating wholesale prices and an industrial production proxy for economic activity as supporting variables for the BRICS countries. Quarter frequency data from 1992 to 2015 is used. Keeping in view the structural breaks and resulting asymmetries, long‐run and short‐run dynamic estimations are conducted using the nonlinear ARDL approach proposed by Shin, Yu, and Greenwood‐Nimmo. We find a positive and significant asymmetric relationship between oil prices and the trade balance in Brazil, India, China and South Africa. The asymmetries of wholesale prices also have a positive and significant effect on the trade balance in the cases of Russia, India and South Africa. The asymmetries of industrial production have a significant but negative impact on the trade balance for India and South Africa. These nonlinear and diverse relationships of oil prices, wholesale prices and economic activity with the trade balance are also confirmed by long‐run parameters for BRICS countries. This study opens some new insights for policy making.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1002/ijfe.1900

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:wly:ijfiec:v:26:y:2021:i:2:p:2177-2197

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().