Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates
The fluctuations in oil price have vital importance for their presumed role in the trade balance. Our study investigates the oil price fluctuation effect on the trade balance for period 1980-2017. We employ linear and nonlinear autoregressive distributed lag models simultaneously and find the hetero...
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| Format: | Article |
| Language: | English |
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Johar Education Society Pakistan
2020
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| Online Access: | http://psasir.upm.edu.my/id/eprint/87983/ http://psasir.upm.edu.my/id/eprint/87983/1/Asymmetric%20effect%20of%20oil%20price%20changes%20on%20trade%20balance%20in%20Saudi%20Arabia%2C%20Kuwait%20and%20United%20Arab%20Emirates.pdf |
| _version_ | 1848860533463187456 |
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| author | Muhammad, Faheem Mohamed, Azali Lee, Chin Mazlan, Nur Syazwani |
| author_facet | Muhammad, Faheem Mohamed, Azali Lee, Chin Mazlan, Nur Syazwani |
| author_sort | Muhammad, Faheem |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | The fluctuations in oil price have vital importance for their presumed role in the trade balance. Our study investigates the oil price fluctuation effect on the trade balance for period 1980-2017. We employ linear and nonlinear autoregressive distributed lag models simultaneously and find the heterogeneous response of Saudi Arabia, Kuwait and United Arab Emirates to oil price fluctuations. The nonlinear ARDL results indicate oil price affects trade balance asymmetrically. We also analyze the moderating effect of real effective exchange rate on the oil-trade balance relationship that found an adverse impact in Saudi Arabia and Kuwait while the positive impact in case of United Arab Emirates trade balance. The oil price marginal effect evaluated at the minimum level of the real effective exchange rate is positive in Kuwait and negative in Saudi Arabia and United Arab Emirates. It also shows positive at the maximum level of the real effective exchange rate in Kuwait and United Arab Emirates while negative in the case of Saudi Arabia that varies at different levels of exchange rate. The findings of the study give policy recommendation related to positive and negative changes of oil price that appear to have a valuable impact on economic decisions. |
| first_indexed | 2025-11-15T12:46:45Z |
| format | Article |
| id | upm-87983 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T12:46:45Z |
| publishDate | 2020 |
| publisher | Johar Education Society Pakistan |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-879832022-05-24T07:55:06Z http://psasir.upm.edu.my/id/eprint/87983/ Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates Muhammad, Faheem Mohamed, Azali Lee, Chin Mazlan, Nur Syazwani The fluctuations in oil price have vital importance for their presumed role in the trade balance. Our study investigates the oil price fluctuation effect on the trade balance for period 1980-2017. We employ linear and nonlinear autoregressive distributed lag models simultaneously and find the heterogeneous response of Saudi Arabia, Kuwait and United Arab Emirates to oil price fluctuations. The nonlinear ARDL results indicate oil price affects trade balance asymmetrically. We also analyze the moderating effect of real effective exchange rate on the oil-trade balance relationship that found an adverse impact in Saudi Arabia and Kuwait while the positive impact in case of United Arab Emirates trade balance. The oil price marginal effect evaluated at the minimum level of the real effective exchange rate is positive in Kuwait and negative in Saudi Arabia and United Arab Emirates. It also shows positive at the maximum level of the real effective exchange rate in Kuwait and United Arab Emirates while negative in the case of Saudi Arabia that varies at different levels of exchange rate. The findings of the study give policy recommendation related to positive and negative changes of oil price that appear to have a valuable impact on economic decisions. Johar Education Society Pakistan 2020 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/87983/1/Asymmetric%20effect%20of%20oil%20price%20changes%20on%20trade%20balance%20in%20Saudi%20Arabia%2C%20Kuwait%20and%20United%20Arab%20Emirates.pdf Muhammad, Faheem and Mohamed, Azali and Lee, Chin and Mazlan, Nur Syazwani (2020) Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates. Pakistan Journal of Commerce and Social Science, 14 (3). pp. 685-714. ISSN 1997-8553; ESSN: 2309-8619 https://www.econstor.eu/ |
| spellingShingle | Muhammad, Faheem Mohamed, Azali Lee, Chin Mazlan, Nur Syazwani Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title | Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title_full | Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title_fullStr | Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title_full_unstemmed | Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title_short | Asymmetric effect of oil price changes on trade balance in Saudi Arabia, Kuwait and United Arab Emirates |
| title_sort | asymmetric effect of oil price changes on trade balance in saudi arabia, kuwait and united arab emirates |
| url | http://psasir.upm.edu.my/id/eprint/87983/ http://psasir.upm.edu.my/id/eprint/87983/ http://psasir.upm.edu.my/id/eprint/87983/1/Asymmetric%20effect%20of%20oil%20price%20changes%20on%20trade%20balance%20in%20Saudi%20Arabia%2C%20Kuwait%20and%20United%20Arab%20Emirates.pdf |