Reviewing the Oil Price - GDP Growth Relationship: A Replication Study

Lanouar Charfeddine, Tony Klein, T. Walther

Research output: Working paperAcademic

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Abstract

This paper presents a thorough replication of Hamilton (2003) which in turn replicates and extends the findings of four seminal papers regarding the oil price-GDP growth relationship. Firstly, we replicate the empirical results obtained with the oil price measures of Hamilton (1983), Mork (1989), Lee (1995), Hamilton (1996), and Hamilton 2003) by using an identical data set of real and nominal oil prices. Secondly, we extend the data sets to 2016Q4 and apply the same methodology. We find that for more recent data, the explanatory power of the proposed oil price measures on GDP growth rates is dwindling. This is an indication that linear autoregressive models do not capture the link sufficiently anymore and more encompassing models are needed.
Original languageEnglish
PublisherQueen's Management School
Number of pages23
DOIs
Publication statusPublished - 2019
Externally publishedYes

Publication series

NameQueen's Management School Research Paper Series
No.09
Volume2019

Keywords

  • oil prices
  • GDP growth
  • asymmetry
  • nonlinearity

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