Exploring the Oil Price and Real GDP Nexus for a Small Island Economy, the Fiji Islands

Energy Policy, Volume 35, Pages 6506-6513, 2007

Posted: 2 Jun 2012

See all articles by Arti Prasad

Arti Prasad

affiliation not provided to SSRN

Paresh Kumar Narayan

Deakin University - School of Accounting, Economics and Finance

Jashwini Narayan

The University of the South Pacific

Date Written: July 25, 2007

Abstract

The goal of this paper is to examine the relationship between real GDP and oil prices using time series data for the period 1970-2005. Our main finding is that an increase in oil has a positive, albeit inelastic, impact on real GDP, inconsistent with the bulk of the literature. We argue that this is not a surprising result for the Fiji Islands. Our central argument focuses on two aspects of the Fijian economy: (1) the fact that actual output in Fiji has been around 50 per cent less than potential output; thus, Fiji’s actual output has not reached a threshold level at which oil prices can negatively impact output; and (2) a rise in oil prices filters through to value added, which in turn is reflected in a larger actual output.

Keywords: Fiji, GDP, Oil prices

Suggested Citation

Prasad, Arti and Narayan, Paresh Kumar and Narayan, Jashwini, Exploring the Oil Price and Real GDP Nexus for a Small Island Economy, the Fiji Islands (July 25, 2007). Energy Policy, Volume 35, Pages 6506-6513, 2007, Available at SSRN: https://ssrn.com/abstract=2072294

Arti Prasad

affiliation not provided to SSRN ( email )

Paresh Kumar Narayan (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Jashwini Narayan

The University of the South Pacific ( email )

Laucala Campus
Suva
Fiji

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