OPEC Energy Review

Publisher:: Wiley
Publication date:: 2021-02-01

ISBN:: 1753-0229

Issue Number

No. 47-4, December 2023

Latest documents

Testing the effects of banking development, economic growth and foreign direct investment on renewable energy in South Africa
The world's climate‐related policies need to be revised to combat environmental issues. Therefore, adopting renewable energy technologies in conjunction with energy efficiency measures are needed to make safe pathways to reduce over 90% of energy related CO2. In this context, this study intends to assess the influence of foreign direct investment (FDI), economic growth, and banking and development on renewable energy consumption in South Africa from 1970 to 2020. The study uses a novel ‘bootstrap Autoregressive Distributed Lag (ARDL)’ testing to empirically analyse the short and long links among the tested variables. The ARDL estimations demonstrate a FDI and economic growth have positive effect on renewable energy consumption. Furthermore, the outcomes reveal that banking sector development affects positively renewable energy use in long run. Therefore, it is suggested that government and playmakers of South Africa must make more efforts to link the economic and baking development with renewable energy by investing capital and funds in renewable energy infrastructure. It will not only boost the economy of the country but also provide an opportunity to clean and green the environment with decreasing rate of greenhouse gases emission like carbon dioxide.
The effect of oil price shocks on stock market performance in selected African countries
The study's objective was to investigate how changes in oil prices affect stock market performance. The study's population consisted of selected African countries chosen based on factors like the size of their stock markets and whether or not they import or export oil. The world development indicator (WDI) and the OPEC bulletin or website served as sources for the data. The vector error correction model was used to analyse the collected data. Regarding the impact of oil price fluctuations on the performance of the stock market, the findings of the study were mixed. Oil price fluctuations have a positive impact on stock market performance for countries that import oil. For oil‐trading countries, the impacts were found to differ across examined countries. Oil price fluctuations had a mixed effect on both large and small stock markets. This demonstrates how crucial it is to investigate changes in the price of oil and how they might impact stock market performance, particularly in African countries.
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Determinants of remittance outflows: The case of Saudi Arabia
The Saudi Arabian economy heavily uses foreign labour and hence, ranks among the top countries not only in the Gulf Cooperation Council region, but also globally in terms of remittance outflows. This study develops a theoretical model to investigate the determinants of remittance outflows from Saudi Arabia. The cointegration and equilibrium correction methods, and adjustments for small sample bias, are applied to the data for 1970‐2021 using the theoretical model developed. In the long run, keeping other factors unchanged, Saudi Arabia's gross domestic and non‐Saudi employment have positive and statistically significant impacts on the remittance outflows, while the impacts of the price level and expatriate levy are negative and statically significant. This study's findings may be useful for macroeconomic policymaking, as the remittance outflows have numerous implications for the development of the Saudi economy. Particularly, remittances are a primary channel for leaking money from Saudi Arabia, reducing the economic growth effects of fiscal spending multipliers.
Predicting Indian electricity exchange‐traded market prices: SARIMA and MLP approach
This research investigates the short‐term (ST) forecasting performance of the daily prices of the Indian exchange‐traded day‐ahead (DAM) market, divided into 13 bid areas, each consisting of states with varied fundamentals. Forecasts are built employing SARIMA (seasonal autoregressive integrated moving average) and MLP (multilayer perceptron) methods. Moreover, the robustness and performance of the model is compared using the lowest error and the Diebold–Mariano (DM) test statistic values. The results indicates that the SARIMA model has high prediction accuracy with error values ranging from 1% to 5% with Southern region having the highest error of 4.53% and Northern having the least error of 1.27%. However, validation by the DM test suggests no statistical significant difference between the two models. The power generators, distribution companies, traders, policymakers, strategists and managers could use the findings for effective power management through proper planning.
Hydrocarbon price spillover to banking performance in Eurozone
The current study investigates the impact of real oil price shocks on the Eurozone banking sector from February 2009 to February 2022, using the Structural Vector Autoregressive method to distinguish the reaction between Eurozone bank indices and three structural indicators in the oil market shocks. The shocks include global oil demand, supply shock, and specific oil market shocks. Our findings show that the banking sector in the Eurozone responds positively toward an oil‐specific demand shock (oil price) in the short run, but it responds negatively in the medium and long run that lasts for a long time. The banking sector, on the contrary, does not react to supply shocks, which provide a significant policy implication for regulators and policymakers.
Simulating policy responses to multiple economic shocks: An experiment with combined impacts of COVID‐19 and oil price crash on Kuwait
Researchers and policy‐makers are used to measuring impacts of an economic shock. However, multiple economic shocks generate disruption that are challenging, not just analytically but also in the interpretations of results (Pagan & Robinson, European Economic Review, 145, 2022, 104120). The disruptions come through multiple channels whose impacts were trickier to measure than emanating from those of a single shock. This study develops and applies a framework to conduct simulation experiments with multiple economic shocks. Kuwaiti data were used to simulate multiple economic shocks to the economy originating from the Corona Pandemic and the collapse of oil price, which simultaneously happened during the first quarter of 2020. As an oil exporting country, Kuwait is used to dealing with recurrent changes in oil prices in the world market as a single shock. However, unlike the oil shock, COVID‐19 has many demand and supply shocks, each with separate transmission channels. The objective here is to quantify relative contributions to overall adverse effects on GDP, and then identify policy instruments required to implement a successful recovery. A recursive dynamic economy‐wide model was formulated and calibrated. The results indicate that the GDP effects range from 35% to 11% declines from the baseline scenario depending on effectiveness of policy responses.
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Exchange rate misalignment: A systematic literature review based on citation and content analysis
Exchange rate policy is regarded as a critical macroeconomic policy. Especially the misalignment of exchange rates is significantly impact on imported goods, particularly oil imports, which ultimately effect external and internal imbalances. This study conducts a systematic literature review on exchange rate misalignment, as well as an intriguing content analysis of the top 100 most cited articles. Further it identifies the most influential authors, papers and the journals in the field using citation analysis. The relevant articles are identified using the Scopus database. Three hundred and seventy‐two scholarly papers have been found relevant. The results of the content analysis show that the purchasing power parity is the most frequently used theoretical foundation, followed by the Behavioural Equilibrium Exchange Rate. Additionally, the analysis reveals that the authors primarily utilised time series data. The identification of essential and core journals is made through Bradford's Law. Schuh (American Journal of Agricultural Economics, 56, 1974, 1) is a pioneering study that discussed the misalignment of exchange rates in the US agriculture sector. Valérie Mignon is the most prolific author in terms of both productivity and impact. The paper authored by O'Connell (Journal of International Economics, 44, 1998, 1) titled ‘overvaluation of purchasing power parity’, is recognised as the most influential paper in terms of average citations per year.
Wavelet based analysis of oil price shocks, exchange rate and stock market behaviour: Evidences from emerging markets
During the second quarter of 2020, with an impact of novel coronavirus (COVID‐19), the oil sector has witnessed the most volatile phase of our economic history. Liquidity in the market became extremely tight and significantly impacted the stock markets. The study primarily aims at investigating the interdependence of the crude oil prices, Nifty50 Index and USDINR exchange rates. Wavelet coherence plots are employed to examine the interdependence of oil prices with Nifty and exchange rates and to analyse the time series information at different times and frequencies. The results also report the existence of long‐run relations using Johansen's cointegration test and vector error correction model. Moreover, the shocks in one variable have been noticed with a persistent and prolonged effect on other variables. However, the results explain that these shocks have short‐term effects, but in the long run, the market becomes stable. The policymakers should create regulations that protect investors' desire to profit and lessen their exposure to unanticipated shocks in the market. The study would assist investors in analysing and comprehending the effects of the abrupt volatility brought on by lockdown during the pandemic on the stock market.