Institutional Quality, Economic Growth and Fluctuations of Oil Prices in Oil Dependent Countries: A Panel Cointegration Approach
- 1 Department of Agricultural Economics, University of Zabol, Zabol, Iran
- 2 Department of Agricultural Economics, University of Zabol, Zabol, Iran
- 3 Department of Economics, Faculty of Economics, University of Tehran, Tehran, Iran
Abstract
The principle aim of this investigation is the study of fluctuations of oil prices impacts on economic growth of oil-dependent countries with respect to institutional quality. For this purpose we use panel cointegration methodology and error-correction model for 32 oil abundant countries covering the period 1975-2010. The result implies that fluctua- tions of oil prices impact on economic growth of countries depend on institutional quality index so that the impact of fluctuation is avoided by countries with sufficiently good institutions. More ever, the long-run ratio of investment to products effect is negative and small that shows the quality of investment projects is more importance than the quantity of them in the economic growth of these countries. The effect of trade openness on economic growth in the long-run is positive, statistically significant, and economically sizable.
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