Top PDF The oil price collapse : some effects on the Scottish economy

The oil price collapse : some effects on the Scottish economy

The oil price collapse : some effects on the Scottish economy

Table 2.7 Total employment loss based on a low estimate of direct Job loss 12/00 and incorporating aaeliorative expenditure effects Sector Directjob Total job loss loss Primary Mineral o[r]

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The price of oil and the Scottish economy

The price of oil and the Scottish economy

What is different between the recent price fall and that of 2008 is the extent to which price forecasts have moved. Markets which failed to predict the spectacular price fall are relatively confident that prices will remain below / around $70 a barrel through to 2017, however as shale gas production begins to slow and as demand recovers slightly over the coming years this could mean a faster-than-expected return to higher prices. The stance of OPEC and Saudi Arabia remains critical. If their current policy of maintaining production levels were to change – and output to be sharply curtailed – the price could soon rise. It is certainly true however that various plausible scenarios for coming weeks and months are feeding through to uncertainty and hence volatility in forward oil markets. Price volatility – measured by using futures contracts – has increased sharply over the last six months, and now stands at its highest levels for over five years (i.e. 2010). It would be interesting to better understand the separate, but linked, effects on production and exploration of low oil prices and high (forward) price volatility.
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Outlook and appraisal [March 1988]

Outlook and appraisal [March 1988]

But to abolish the key instrument which attracts mobile firms and therefore substantial jobs to the Scottish economy without doing anything to mitigate the effects of external takeovers [r]

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North Sea Oil and Genuine Saving in the Scottish Economy

North Sea Oil and Genuine Saving in the Scottish Economy

Investment Management, 2011). The fiscal guidelines introduced in 2001 limit the non-oil structural deficit of the central government to 4% of the value of the GPF assets, which are invested mainly in foreign equities and fixed-income securities to try and avoid adverse real exchange rate (‘Dutch disease’) effects on the Norwegian economy (Veiculescu, 2008). Given that 4% is the estimated long- run real rate of return on GPF assets, this is a capital-preserving endowment fund principle. As Solow put it: “The Norwegians said, here is an asset we are going to use up – the one thing we must avoid is a binge. They tried hard to convert a large fraction of the revenues, of the rentals, of the royalties from North Sea oil into investment....I confess I don’t know how well they succeeded but I am willing to bet that they did a better job of it than the United Kingdom” (Solow 1991, p.184).
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The effects of Oil Price Shock on the Indian Economy – A Study

The effects of Oil Price Shock on the Indian Economy – A Study

Presently the research paper has drawn the conclusion based on the data analysis and findings, based on the outcome of the table no 1 the study found that the huge variations is there crude oil prices fluctuation and great draw back and insignificant impact on the economic development activity (2010 - 2018). In this concern, policymakers, financial analyst and economists have paid close thoughtfulness to alterations in internationally traded crude oil prices and apprehensive about the prospective impact of oil price shocks on Indian economic development activity. The study has examined the how the effect of crude oil price changes on the Indian economy fluctuates, the paper finds the fluctuation of economy indicators has dependent on the fundamental cause of the oil price shock, that is, whether oil price variations are motivated by shifts in oil demand or supply. Moreover, the paper find that the explicit cause of the oil price shock distresses the size and nature of the responses of foremost Indian macroeconomic aggregates. In specific, when an increase in oil prices is instigated by an oil supply disorder in India with this an insistent to deterioration in its GDP and a rise in the CPI inflation. The outcome of the table no -4 has revealed that the Indian Government debt volatility is mostly elucidated by foreign oil intensity shocks as these shocks cause main lead to create the fluctuations in Indian Government revenue. And the study found that the overseas oil shocks are the highest responsible of Indian crude oil price fluctuation. Further This research paper examined the impact of crude oil price shockwaves on the eight macroeconomic variables i.e. GDP, IIP, WPI, real output, real exchange rate interest rate and inflation using Structural Vector Autoregressive (SVAR) model during period from 2010 to 2018.
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Some effects of North Sea oil on Irish economy

Some effects of North Sea oil on Irish economy

B u t , usually, equilibrium conditions are presented where the small country's external reserves neither grow nor diminish and the balance o f trade, like relative prices, remains uncha[r]

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Oil price shocks and their short  and long term effects on the Chinese economy

Oil price shocks and their short and long term effects on the Chinese economy

prices in China. Meanwhile, the oil pricing system on domestic market went through two revolutions from the late 1990s to the early 2000s: the first was in 1998, which pegged the prices of crude and petrochemical products to Singapore market; the second was in 2001, two more markets, Rotterdam and New York were brought into equation. We can see that the domestic oil prices are becoming increasingly related to the world market, and price controls are losing their effectiveness gradually. According to our partial equilibrium analysis, PPI is positively related to oil price: 100% increase in oil price can cause 7.34% increase in PPI in the same month, and 11.33% in the following month. On the other hand, CPI commodities are still under strict restriction. Our empirical research finds no evidences for a direct relationship between oil price and CPI. This structure of price control keeps the price of final output under restriction, and at the same time leaves input costs floating. For consumers, the baffled price transmission mechanism stabilizes commodity prices even when oil-price shock happens. This can somewhat mitigate the short-term effect. For producers, their aggregate profit rate is more sensitive to oil-price shocks because of limited space for them to mark up their products. This would doubtlessly cause the decrease in investment, and thus amplify the long-term impact.
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Oil Price Uncertainty in the Iranian Economy

Oil Price Uncertainty in the Iranian Economy

The theories of investment under uncertainty and real options predict that uncertainty about, for example, oil prices will tend to depress current investment and consumption. In this paper, we examined the effects of oil price uncertainty on real economic activity in the economy of Iran, in the context of a dynamic multivariate framework in which a structural vector auto-regression has been modified to accommodate multivariate GARCH-in-mean errors, as in Elder & Serletis (2010). In this model, oil price uncertainty is the conditional standard deviation of the one-period-ahead forecast error of the change in the price of oil. On the basis of information criteria, we find that the multivariate GARCH-in-mean VAR embodies a better description of the data and is preferred over a homoscedastic VAR in Iran.
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The response of remittances inflows to asymmetric oil price shocks in Egypt

The response of remittances inflows to asymmetric oil price shocks in Egypt

However, the stability of in fl owing remittances in Egypt is a critical issue that needs a regular investigation for two reasons. First, remittance fl ows to the MENA region driven by in fl ows to Labour Abundant countries (Farzanegan and Hassan, 2016). That makes Egypt the top recipient of remittances in the MENA region. Second, the Egyptian economy is dependent on remittances in fl ows which mainly sent from the Gulf region. The largest source of remittance fl ows from GCC oil-exporting rich-countries exceed 70 per cent of total remittance in fl ows to Egypt and accounts for around 5 per cent of its GDP in recent years. In these countries, the population is less, and the economic activities are highly dependent on oil rents. So, the substantial economic spillovers of global oil price changes likely include signi fi cant effects on remittances. Hence, oil prices shocks can affect the steady trajectory of remittances in fl ows in Egypt.
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The impact of Oil Prices on the International Economic Arena: The Economic Factors and International Players

The impact of Oil Prices on the International Economic Arena: The Economic Factors and International Players

Throughout history the new technologies and discoveries revolutionized the way we live. The discovery, the oil, has been critical for society, becoming the world’s most profitable and essential industry transforming itself from domestic to international business. The aim of this paper, above all is to analyze the role of oil and its price volatility in world economy. The ongoing changes and transformations in world oil industry tend to have a great effect not only on the oil- importing countries but also on oil-exporting nations. The demand or supply-triggered oil price volatility differ in its effects to world economic activity. Although it may have different effect for the oil importing nations in comparison to oil exporting nations, still inflationary pressure may be a common feature. A number of points relevant to the study are put forward highlighting pros and cons of issues discussed. The paper also elaborates the environmental concerns, deriving from the increase of oil consumption and the necessity (globally) to increase efforts in finding a decent,(environmentally friendly) replacement for oil.
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OIL PRICE SHOCKS, EXCHANGE RATE AND NIGERIA’S ECONOMY

OIL PRICE SHOCKS, EXCHANGE RATE AND NIGERIA’S ECONOMY

Empirical studies on the effect of oil prices on the macro economy have provided different results on the relationship. Some studies have shown that an oil price increase had positive effect on the growth of an economy (Shafi and Hua, 2014; Jiranyakul, 2015). Others have concluded that increase in the price of oil could have detrimental effects on macroeconomic performance (see for instance, Hamilton, 1983; Gosh et al, 2009; Elder and Serletis, 2010). The findings largely depend on whether the economies in question are oil exporting or importing and the degree of their dependency on oil. Some studies in the U.S. provide some striking conclusions on the subject. In an insightful paper, Hamilton (1983) revealed a strong causal and negative relationship between oil price and real GNP; oil price was found to have contributed to some of the U.S. recession. Hamilton and Hererra (2004) established that monetary policy measures may not have strong effects in reducing oil price shocks. In a similar study on the U.S economy, Raymond and Rich (1997) employed the Markov State Switching approach to analyze the effect of oil price shocks on post war business cycle fluctuations. It was revealed that the behaviour of oil prices has been a contributing factor to the slow growth of output. However, the movement in oil prices has not been a major determinant in the slow growth process of the U.S.
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Oil Price Shocks and Fiscal Spending in Oil Producing Economy: The Role of Asymmetry

Oil Price Shocks and Fiscal Spending in Oil Producing Economy: The Role of Asymmetry

The aforementioned present extensive studies on oil prices, however, it must be mentioned that the bulk of these studies assume linearity of oil price changes in their respective specification. Hence, inference drawing base on their findings must be with caution since the resulting estimates are likely to be asymptotically biased if the true relationship is nonlinear and mistakenly specified as linear and vice-versa (see [4,30,31] for review on nonlinear and asymmetric effects of oil price changes). It is in this light, therefore, that this present study further advances this emerging strand of literature using the case of the Nigerian economy. Essentially, the study considered both the linear (symmetry) and nonlinear (asymmetry) impact of oil price shocks on government fiscal spending following the approach proposed by Shin and Greenwood-Nimmo [2]. This approach simplifies the decomposition of the oil price into positive and negative partial sum decompositions of changes. By asymmetry, the impact of oil price shock is, assumed to differ between positive and negative changes in oil price. In other words, the asymmetric model is used to test whether the government in the course of their fiscal spending reacts more to positive (negative) oil price shock than to negative (positive) oil price shock.
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Forecasts of the Scottish Economy [March 2015]

Forecasts of the Scottish Economy [March 2015]

Additionally, the recent fall in the oil price, and subsequent rapid fall in CPI inflation would be expected to reduce input costs to business and act as an effective wage increase to households (in particular where energy prices reflect these significant falls (for example in petrol/diesel prices, and domestic electricity and gas bills). The Bank of England (2015b) notes that while businesses may see a fall in their costs, the impact on business investment is unclear: some investment could be encouraged by the lower oil price but there may also be reductions in investment in the UK Continental Shelf (UKCS). This is clearly not positive news for all parts and sectors of the Scottish economy, however it is too early to say what the impact could be over the medium or longer term on the oil and gas sector and activity in the UKCS and the North East of Scotland economy. In the absence of the oil price rebounding significantly, many have speculated that there could be a period of low oil prices over the next couple of years or so. In the absence of a period of deflation for the UK – which the Bank of England has suggested could arise, but is likely to be only brief – a relatively brief period of low oil prices could be likely to have a net positive impact on Scotland’s onshore economy (i.e. the basis on which quarterly figures on Scottish GDP is calculated and reported, which does not directly include activity in the UKCS).
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Transmission Channels of Crude Oil Price Shocks on Kenya’s Economy

Transmission Channels of Crude Oil Price Shocks on Kenya’s Economy

Zaytsev (2010) investigated the impact of oil price changes on the macroeconomic performance of Ukraine, a net oil importer, using a Structural VAR/VECM approach for the period between 1996 and 2006. The focus was on six macroeconomic variables: nominal foreign exchange rate, CPI, real GDP, interest rate, monetary aggregate M1 and average world price of oil. The study found that oil price increases tend to deteriorate real economic activity in the short-run as opposed to the long run. The reaction goes through indirect effect, namely the downward demand effect which is characterized by contraction of aggregate demand in response to adverse oil supply shock. The study however acknowledges its failure to empirically observe the direct effect of oil price shock which theoretically, should have forerun both cost and downward demand effects, resulting in increased inflation.
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The effect of crude oil price change and volatility on Nigerian economy

The effect of crude oil price change and volatility on Nigerian economy

Some studies distinguish price uncertainty from mere price change, assuming that price uncertainty has specific effects on the economy. Ferderer (1996) calculates monthly oil price volatility as a standard deviation of daily price changes and argues that volatility has an explanatory power that can estimate fluctuations in U.S. economic output. Ahmed and Wadud (2011), on the other hand, employ an Exponential General Auto Regression Conditional Heteroscadasticity (EGARCH) model to estimate monthly oil price volatility, apply the SVAR model to 1986 to 2009 monthly data, and thus analyze the effects of the oil price shock on Malaysia’ s industry. They suggest that oil price volatility negatively affects Malaysian industrial production. Notably, they point out that oil price volatility lowers price levels over the long term, and the Malaysian authorities respond to this with an expansionary monetary policy to stimulate the economy. The Malaysian case is an example of how a government responds to the effects of an international oil price shock. In general, developing countries like Nigeria, as opposed to industrialized countries, have only limited financial tools to implement financial policy, so it is worth looking at how the monetary authority of such a resource rich country responds to an international oil price shock.
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The Dynamics of Oil Prices in the Nigerian Construction and Economic Growth

The Dynamics of Oil Prices in the Nigerian Construction and Economic Growth

Meanwhile, in the study that empirically investigated the relationship between construction flow and economic growth for Saudi Arabia during the 1970–2011 period, Alhowaish [63] found that the economic growth and oil revenue have independent effects on construction growths in the long-run; while oil revenues have significant effects on economic growth just in the short-run. It further reveals existence of strong causality that runs from economic growth and oil revenues to the construction industry with feedback effects that run from construction to economic growth only. A recent study conducted by Okoye, et al. [64] examines the interrelationship between the construction sector, oil prices, and the actual gross domestic product (GDP) in Nigeria. The study found that even though very strong positive and significant correlations exist between the construction sector output and total GDP output, the construction sector output and oil prices, and the total GDP output and oil prices, these linear relationships only exist for a short time. It also reveals that the relationships do not result in any direct causal influence on each other, except for the uni-directional causal relationship that flows from the total GDP output to the construction sector output. The study then argues that neither the construction sector nor the oil prices directly influence the aggregate economy; rather, it is other sectors’ activities that stimulate the construction sector in Nigeria.
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The macroeconomic and financial effects of oil price shocks

The macroeconomic and financial effects of oil price shocks

To analyze the intrinsic relationship in short term between these variables, the critical role that oil plays in the economy is irreplaceable. Firstly, gasoline and diesel fuel are used as primary transportation fuels, which are derived from the crude oil. Therefore, the cost of production and transportation will rise along with the short-term increase in the oil price, which implies that the oil price shock may induce a worldwide surge in commodity prices and underlying inflation. In addition, facing the drastic growth in commodity prices, many people will choose to smooth consumption. The adverse factors including higher cost and lower profit hamper economic development and have a negative impact on the stock market. And low return in the stock market and potential high inflation are likely to encourage people to purchase gold as investment or speculation, which tends to trigger a sustained increase in the price of gold. Hamilton (1983, 1996) asserts an essential role for oil price increases as one of the main cause of recessions in U.S. since the increases in the price of oil haunt prior to the most recession.
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The Origin of Oil Plunge in Political Economy and Aftermath on the Oil Price

The Origin of Oil Plunge in Political Economy and Aftermath on the Oil Price

Since the past decades, humans watched the changes of politic and economy in the world from the small campaign into huge riot. This kind of events happened all over the world due to the demand for the better administration and ruler had increased until today. Nowadays, the world witnessed the effects of the political economic on the human needs. However, oil price is the major parts of the human needs which affected due to the world political economy revolution. As the revolution increase from time to time, the oil price faced challenges and dilemma in terms of the rise and fall of the oil prices. Oil industry plays huge roles on the social development and economy as it effects all the countries in the world as well. Nevertheless, the oil price cannot be analyzed theoretically and practically based on the political issues in the oil producer country while political economy hold the vital role in determining the right price of the oil in the world.
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Effects of Oil Price Shocks on the Ghanaian Economy

Effects of Oil Price Shocks on the Ghanaian Economy

Signifi cant relationships from unrelated variables could be obtained when non-stationary time series, are used in a multivariate econometric model. For that, in these cases, we had to by pass unit root test and cointegration through Vector Error Correction Model (VECM). Although the convention in most of the literature, is the use of unrestricted vector autoregression (VAR) model for the oil price-macroeconomy relationship, we decide to apply the restricted VAR or vector error correction model (VECM) for this study. The results were however compared with the results generated using an unrestricted VAR model. The essence of the VECM lies in the implication that the series being studied is cointegrated, thus implying the existence of long-run relationships between the integrated time series. In statistics, the presence of cointegration among relevant variables indicates that a linear combination of nonstationary time series exhibits a stationary series, thus avoiding the problem of spurious regression. An error correction mechanism is incorporated in the model to capture the variations associated with adjustment to a long term equilibrium. For a given time series,
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Oil Price Shocks-Macro Economy Relationship in Turkey

Oil Price Shocks-Macro Economy Relationship in Turkey

Following the leading approaches employed in literature, both symmetric and an asymmetric specification of real oil price changes are employed for the developing economies as well. Berument and Ceylan (2005) analyzed the effects of symmetric oil price shocks on industrial production of Middle East and North African countries over the period 1960-2003. They showed that oil price shocks increased the industrial production of Iraq, Jordan, Kuwait, Algeria, Oman, Syria, Tunisia, Qatar, Iran, and Oman. Olomola and Adejuma (2006) studied the effects of oil shocks on output, real exchange rate, money supply, and inflation in Nigeria over the period 1970- 2003. Their empirical results indicated that the oil price shocks did not affect output and inflation but had strong effect on money supply and exchange rate. Sari and Soytas (2006) analyzed the effects of oil price shocks on industrial production, stock returns, and interest rates in Turkey for the period of 1987Q1 – 2004Q3. They conclude that oil price shocks do not seem to affect the macroeconomic variables in Turkey. Farzanegan and Markwardt (2009) studied the effects of asymmetric oil price shocks on an oil exporting Iranian economy from 1975Q2 to 2006Q4. Their empirical findings indicated that positive oil price shocks increased the real effective exchange rate, real imports, real GDP per capita, inflation and real government expenditures. On the other hand, the negative oil price shocks decreased the real effective exchange rate and real GDP per capita and increased the inflation and the real government expenditures. Kumar (2009) found that oil price shocks negatively affected industrial production of the Indian economy over the period 1975Q1- 2004Q3. Chuku et al. (2010) investigated the effects of oil shocks on Nigerian economy between 1970Q1 and 2008Q4. They found that after the positive oil price shock output and inflation increased and oil prices Granger cause inflation. Mendoza and Vera (2010) analyzed the influence of oil price shocks on Venezuela during the period 1984Q1—2008Q3. They reported that oil shocks had positive and significant effects on output and the Venezuelan economy is more responsive to increases in oil prices than decreases.
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