Global Academy of Training and Research Journal

Share:

HTML |

DOI 10.35609/jber.2019.4.1(8)

Reference to this paper should be made as follows: Yen, S; Phoong; Wai, S; Phoong, (2019). An ARDL Approach on Crude Oil Price and Macroeconomic Variables, J. Bus. Econ. Review, 4(1) 68 – 73 https://doi.org/10.35609/jber.2019.4.1(8)

Received: December 11, 2018 | Accepted: March 15, 2019

An ARDL Approach on Crude Oil Price and Macroeconomic Variables
Seuk Yen, Phoong, Seuk Wai, Phoong
Department of Mathematics, Faculty Science and Mathematics, Sultan Idris Education University, 35900 Tanjung Malim, Perak, Malaysia
Department of Operations and Management Information Systems, Faculty of Business and Accountancy, University of Malaya, 50603 Kuala Lumpur, Malaysia Abstract

Objective - The removal of fuel subsidies by the Malaysian government in 2014 has been implement with the managed float system for fuel prices.

Methodology/Technique - This study investigates the impact of the managed floating system of crude oil prices on the Malaysian economy using ARDL approach by looking at macroeconomic variables such as inflation, economic growth and unemployment rates.

Findings - The results show that all of the variables have short lived relationship with oil prices whereby inflation and economic growth are positively related to oil prices. However, unemployment rate has a negative relationship with the changes of WTI crude oil prices.

Novelty - The major input in the economy of Malaysia contributes to a positive relationship between inflation and oil prices, whilst the contribution of Malaysia being an oil-producing country results in the positive relationship of economic growth and oil price. Likewise, as oil prices are high, the increase in demand results in increase in job opportunities. Lastly, the correlation test shows that inflation and economic growth have a high positive correlation while unemployment rate has a low negative correlation with oil price.

Type of Paper: Empirical.

Keywords: ARDL; Crude Oil Price; GDP; Inflation; Unemployment.

JEL Classification: E10, E30, E39.

DOI: https://doi.org/10.35609/jber.2019.4.1(8)

Price: USD 25