Authors: Kwanruetai Boonyasana
Addresses: Rajamangala University of Technology Phra Nakhon (RMUTP), The National Defence College (NDC) Alumni Think Tank, Thailand
Abstract: Thailand has long been familiar with price control for petroleum products of economic or social importance. This paper applies the model of Garen et al. (2011) to investigate whether increases in petroleum product prices can reduce real gross domestic product (GDP). Time series analysis of data for the 24 quarters from 2009 to 2014 is used to determine real GDP. Two models use an autoregressive conditional heteroskedasticity process with regard to GARCH(1, 1) and EGARCH, and employ lagged variables to incorporate feedback over time. Price increases for both gasoline with 85% ethanol (E85) and unleaded regular gasoline with research octane number of 91 (UGR91) appear to have a positive effect on real GDP. This might be a result of government subsidies and taxes, including the effect of oil companies' income on real GDP. Contrastingly, low sulphur diesel (LSD) price increases appear to have a negative effect on real GDP.
Keywords: petroleum product; price; economic growth; Thailand; exponential generalised autoregressive conditional heteroskedastic; EGARCH; generalised autoregressive conditional heteroskedasticity; GARCH(1, 1).
International Journal of Economic Policy in Emerging Economies, 2018 Vol.11 No.1/2, pp.40 - 48
Received: 04 Sep 2015
Accepted: 13 Oct 2015
Published online: 03 Apr 2018 *