THE SYMMETRIC AND ASYMMETRIC EFFECTS OF CRUDE OIL PRICE CHANGES ON ECONOMIC GROWTH AND INFLATION IN SAUDI ARABIA

Back to Page Authors: Mounir Belloumi

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Keywords: oil price variations, economic growth, Inflation, Saudi Arabia

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Abstract: This study analyses the symmetric and asymmetric effects of crude oil price changes on economic growth and inflation in Saudi Arabia by employing both linear and nonlinear ARDL models. Saudi Arabia is one of the major world energy-market players. The results report the presence of symmetric and asymmetric effects of oil price changes on inflation in both the short run and long run whereas there is the only asymmetric impact of oil price changes on economic growth. Oil price increases (decreases) lead to higher (lower) economic growth and inflation in Saudi Arabia in both the short-run and long run. Our findings confirm that the Saudi economy is more vulnerable to oil price changes. Thus, Saudi authorities should enhance the process of diversification of economic activities to secure the economic performance from the risks caused by the oil price shocks.

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