Publication: Evaluating the mechanism of oil price shocks and fiscal policy responses in the Malaysian economy
Date
2013
Authors
Bekhet H.A.
Yusoff N.Y.M.
Journal Title
Journal ISSN
Volume Title
Publisher
Institute of Physics Publishing
Abstract
The paper aims to explore the symmetric impact of oil price shock on economy, to understand its mechanism channel and how fiscal policy response towards it. The Generalized Impulse Response Function and Variance Decomposition under the VAR methodology were employed. The empirical findings suggest that symmetric oil price shock has a positive and direct impact on oil revenue and government expenditure. However, the real GDP is vulnerable in a short-term but not in the long term period. These results would confirm that fiscal policy is the main mechanism channel that mitigates the adverse effects oil price shocks to the economy. � Published under licence by IOP Publishing Ltd.
Description
Keywords
Malaysia , Economics , Adverse effect , Empirical findings , Fiscal policies , Government expenditure , Impulse response functions , Long-term period , Oil price shocks , Variance decomposition , conference proceeding , expenditure , fiscal policy , Gross Domestic Product , oil trade , policy analysis , Costs