Authors: Svetlana Balashova
Addresses: Faculty of Economics, Department of Economic and Mathematical Modelling, Peoples' Friendship University of Russia (RUDN University), Miklukho-Maklaya Str.6, Moscow 117198, Russia
Abstract: This paper investigates the links between oil price volatility and total factor productivity (TFP) growth using various econometric techniques. Our main result is that the volatility of oil prices has a negative and significant effect on TFP growth for the global economy and for mature economies. We assume that uncertainty in commodity markets reduces risky investments and inhibits innovation and technological progress. Nowadays, COVID19 and the oil price war between the top crude-oil producers have caused volatility in the oil market. Our results suggest that this will affect TFP during the next few years, even if the global economy is able to recover soon.
Keywords: TFP; total factor productivity; economic growth; oil price; volatility; GARCH-M model; Granger causality; VAR model.
International Journal of Trade and Global Markets, 2021 Vol.14 No.6, pp.548 - 558
Received: 06 Apr 2020
Accepted: 15 Apr 2020
Published online: 10 Nov 2021 *