On the Dynamics of Indian GDP, Crude Oil Production and Imports

22 Pages Posted: 24 Jun 2015

See all articles by Aviral Kumar Tiwari

Aviral Kumar Tiwari

Rajagiri Business School; IFHE University (ICFAI) - Faculty of Management

Date Written: June 2015

Abstract

This study investigates the static and dynamic causal relationship among income, crude oil production and imports for the Indian economy. The static‐short‐run Granger causality shows that income and crude oil imports Granger‐cause domestic crude oil production. This implies that gross domestic product (GDP) and oil imports contain important information in predicting the production of crude oil not the vice versa. The error correction value −0.415 implies that disequilibrium in GDP will get corrected in the long run by the speed of adjustment of 41.5 per cent in a year. The dynamic analysis reveals that the most exogenous variable is crude oil production as it is mostly dependent on itself, and relatively less is accounted by other two variables; GDP is a relatively less exogenous variable, and crude oil exports fairly good proportion of forecast error. Further, we found that the most endogenous variable is crude oil imports which is mostly dependent on crude oil production.

JEL Classification: C22, O41, Q38

Suggested Citation

Tiwari, Aviral Kumar, On the Dynamics of Indian GDP, Crude Oil Production and Imports (June 2015). OPEC Energy Review, Vol. 39, Issue 2, pp. 162-183, 2015, Available at SSRN: https://ssrn.com/abstract=2622263 or http://dx.doi.org/10.1111/opec.12047

Aviral Kumar Tiwari (Contact Author)

Rajagiri Business School ( email )

Kochi, 682039
India

IFHE University (ICFAI) - Faculty of Management ( email )

India

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