Essays on the Economic Effects of Oil Price Shocks on Oil-Exporting Developing Countries

Alburaies, Maali (2023) Essays on the Economic Effects of Oil Price Shocks on Oil-Exporting Developing Countries. Doctoral thesis, University of East Anglia.

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Abstract

This thesis aims to examine the relationship between different types of oil shocks and macroeconomic indicators, central bank reaction functions, and the efficiency scores of manufacturing firms in oil-exporting developing countries. To accomplish the thesis’s objectives and arguments, this thesis contains of five chapters, including three empirical ones. Chapter 1 provides a general introduction to the thesis. In Chapter 2, we empirically examine Kilian’s (2009) arguments that treating oil prices as exogenous is misleading. We disentangle them into three structural shocks: oil supply, aggregate demand, and oil-specific demand shocks. We utilize Kilian’s (2009) decomposition method for oil shocks within a global oil-market Structural Vector Autoregression (SVAR) model framework. The findings support the validation of Kilian’s assumptions for recent episodes of oil price fluctuations. We show that the primary sources of oil movements are from oil demand sides, while oil supply shocks have a muted and limited influence. We contribute to the literature by examining the symmetric and asymmetric relationships of structural oil shocks and selected macroeconomic indicators, such as aggregate government expenditure, aggregate government revenue, and the government budget of oil-exporting countries. The results suggest that these fiscal indicators respond to oil shocks depending on their sources. Moreover, we find that the impact of aggregate demand shocks is asymmetric in oil producers’ fiscal indicators. In Chapter 3, we investigate the response of central bank reaction functions in selected oil-producing developing countries, Bahrain, Kuwait, Oman, and Saudi Arabia, to the three sources of oil shocks. To achieve this, we utilize the Generalized Mothed of Moments (GMM) model. Our results show that in symmetric augmented Taylor rule estimations, the policy rates do not react to the structural oil shocks, and there are different preferences in the central bank decisions of GCC. However, the asymmetric Taylor rule estimations explain how some of GCC countries react to our structural oil shocks. Chapter 4 investigates how the three structural oil shocks affect the firm performance by measuring the efficiency scores of the manufacturing sector in Kuwait, an oil-producing country. We use a confidential dataset of Kuwaiti manufacturing firms from 2003-2019 and a two-stage DEA model. Our findings suggest that the efficiency scores of Kuwaiti manufacturing sectors significantly respond to structural oil shocks, with evidence of asymmetric associations between firm efficiency scores and two structural oil shocks, namely, oil supply and aggregate demand shocks.

Item Type:	Thesis (Doctoral)
Faculty \ School:	Faculty of Social Sciences > School of Economics
Depositing User:	Chris White
Date Deposited:	06 Aug 2024 07:43
Last Modified:	06 Aug 2024 07:43
URI:	https://ueaeprints.uea.ac.uk/id/eprint/96157
DOI:

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