Journal of Finance and Economics
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Journal of Finance and Economics. 2013, 1(4), 62-68
DOI: 10.12691/jfe-1-4-2
Open AccessArticle

Oil Price Volatility and its Impact on Economic Growth in Pakistan

Muhammad Jawad1,

1Department of Leadership and Management Sciences, National Defence University Islamabad

Pub. Date: September 11, 2013

Cite this paper:
Muhammad Jawad. Oil Price Volatility and its Impact on Economic Growth in Pakistan. Journal of Finance and Economics. 2013; 1(4):62-68. doi: 10.12691/jfe-1-4-2

Abstract

The main objective of this research is to analyze the impact of oil price volatility on the economic growth of Pakistan. Secondary data from 1973 to 2011 were used to estimate the coefficients. Linear Regression analysis is used to analyze the dependency among the dependant and independent variables. All variable Oil price, Oil supply, oil demand, Gross Domestic production, Public sector investment, private sector investment and Trade balance is stationary at 1st Difference through ADF test. Trade Balance, Private sector investments have a significant effect on Gross domestic production and Public sector investment, Oil price volatility has insignificant impact on Gross domestic production. Government should make a proper plan and procedure according to Pakistan’s economic growth and requirement which would help to maintain the equilibrium of oil demand and supply and decreased the impact of oil price volatility on the economic growth. Meanwhile, the government of Pakistan also focused on its trade balance and also tries to increase private sector investment to increase its economic growth.

Keywords:
oil price volatility linear regression macroeconomic variables economic growth of Pakistan

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