Assessing the Impact of the Oil Price Shocks on Economic Growth in Oil-Exporting Arab Countries

The role of oil and gas in the modern economy is undeniable. That is why oil-exported countries have a good chance to wealth. But if the economy doesn't have diversification or there is no political stability this revenue cannot become welfare for the long run. As well as the changing of oil prices doe in the world market can impact the revenues of oil-exported countries. The purpose of the research – to assess the impact of the oil price shocks on economic growth in oil-exporting Arab countries. As a methodology, there were chosen VAR models and Granger causality tests. The practical importance of the research is to predict economic growth in other oil-exporting countries. The authors came to the conclusion that oil-price change has positive impacts on GDP growth in oil-rich Arab countries and there is the strong dependency from oil prices. The originality and scientific novelty of the research connected with this argue that oil revenues have impacts on economic growth only in economic and political stability.

The impact of world oil and food price shocks on the interdependence of Brazil and Russia: SVAR-DCC-GARCH model

This study seeks to identify the extent to which global oil and food price volatilities affected the interdependence of the Brazilian and Russian economies in the period from 1996 to 2021. The ARCH/GARCH framework was used to model the volatility of oil and food prices. The Structural Vector Autoregressive (SVAR) approach was used to ascertain the sensitivity of key economic indicators to oil and food shocks. The Impulse Response Function (IRF) was used to trace short-term effects over a period of 12 months. Subsequently, the multivariate dynamic conditional correlation DCC-GARCH model, created by Engle & Sheppard (2001), was used to model time-varying correlations of paired macroeconomic variables. This study contributes to the empirical literature in two fundamental ways. Firstly, it pairs the two largest oil and food producers in the BRICS bloc. Secondly, unlike some earlier studies, the applied methodology ensures the effectiveness of the results by using stationary time series data. The results show that Brazil and Russia have long-run spillover effects for all macroeconomic variables in response to both oil and food price shocks. Furthermore, money supply and exchange rate variables exhibited declining positive correlation coefficients during the global financial crisis of 2008–2009, but peaked in early 2020 due to the Covid-19 pandemic. As a corollary of the main findings, the researchers recommend that investors should diversify their portfolios beyond these two economies in order to minimize the risk of contagion during severe global crises.