Oil Prices and Economic Growth

Since the mid-20th century, crucial importance of crude oil in supplying global energy demand has become one of the major indicators of world economic activity. Even after the emergence of alternative energy sources such as the sun, water and wind, the importance of crude as the main source of energy remains undeniable. The rapid rise in oil prices worldwide and fluctuations in exchange rates are regarded as factors hindering economic growth.

There are various empirical literature on the relationship between the change in crude oil price and economic growth. Especially after Hamilton's study in 1983, a negative correlation between macroeconomic activity and crude oil price has been widely accepted. He pointed out that the price of crude oil rose and the production of the US fell from 1948 to 1980. Hamilton's research results have been confirmed and expanded by many authors and researchers. Hooker (1996) confirmed and expanded Hamilton's research between 1948 and 1972 and proved that the level of crude oil price and its change reflects the impact on GDP growth. In the third and fourth quarter after the shock, a 10% rise in crude oil prices resulted in a 0.6% drop in GDP growth. Therefore, Li et al. The result of Granger's causality test proves that Lunge's crude oil price caused the US economy before 1973, but Granger's reason is no longer discovered from 1973 to 1994.

There are various empirical literature investigating the relationship between economic growth and volatility of crude oil price. Hamilton's research in 1983 showed that the rise in crude oil prices resulted in a decline in US production growth between 1948 and 1980, so a negative correlation between crude oil prices and macroeconomic activities was widely accepted It has been. Hamilton's results have been confirmed and promoted by many other researchers. Hooker (1996) confirmed the results of Hamilton and proved that the oil price level and its change between 1948 and 1972 had an impact on GDP growth. This was reflected in a 10% rise in crude oil prices, which resulted in a 0.6% drop in GDP growth rate in the third and fourth quarter after the shock. Therefore, Mork (1989), Lee et al. Granger's causality test results confirmed that the Granger crude oil price caused the US economy before 1973, but it was no longer caused by Granger from 1973 to 1994.