The Impacts of Oil Price on Taiwan Economic Growth

• Main Authors: Chung I-Hsiu, 鍾宜秀
• Other Authors: Tsai, Li ju
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/09091748427267279116

碩士 === 輔仁大學 === 金融與國際企業學系金融碩士班 === 99 === Many economists and governments are very concerned about the relations between the crude oil prices and economic growth. In the past three decades. Major economic downturns often appear after the rises of oil price. This makes governments alert to that the reliance on crude oil for a country’s economy could be a serious problem. Economists have also extensively investigated the relationship between the changes in crude oil prices and the overall economic activities to explore whether the rise of oil price is the main cause of recession. In the literature, many authors found out that the rise of oil prices will cause economic recession. Furthermore, changes in crude oil prices have asymmetric impacts on economic growth after 1973. The impacts of rising oil prices are larger than the impacts of decreasing oil prices. Some scholars also noted that the oil price changes have more significant effects on economic activity during the periods of economic downturn than r periods of recovery. The oil price changes leading changes in real GDP in Taiwan. That is, the oil price is a key determinant of the output volatility in Taiwan. But few studies explore the asymmetric effects of oil prices on the real GDP growth rate of Taiwan. Therefore, this article tries to investigate whether the effects of oil price on real GDP in Taiwan are different during the periods of oil price ups and downs, and during the periods of economic boom and recession. In addition, this article also investigates whether the oil price impacts on economic growth rate are different between the periods of excess demand of crude oil and periods of excess supply. Meanwhile, we analyze whether the influences of oil price on the economic growth of Taiwan are dependent on Taiwan’s ratio of oil import to GDP. The empirical results show that the asymmetric impacts for ups and downs of oil prices on the growth rate for Taiwan is not as significant as in the literature for other countries. In addition, the economic growth rates are more sensitive to the oil price changes during economic downturns than during the booms, which is consistent with the view of Clements and Krolzing (2000) . The empirical studies also find that the oil price changes have less negative effects on economic growth in the periods of excess oil demand than in excess supply periods This means that even the rise of oil prices may increase economic costs, but the strong demand of oil also reveals that the economic situation is in the process of thriving. Therefore, the negative impacts of oil price rising on the economy are less significant.