The impact of oil price shocks on economic growth (A case study; selected six OPEC countries) during the period (1995-2014) panel-data model

This paper examines the impact of oil price shocks on economic growth in selected six OPEC countries. In this regard, we extracted the Petroleum Exporting Countries Data. Variables of the model are GDP, oil price, government expenditure, foreign direct investment, inflation, exports and imports. An annual data for the period 1995 to 2014, for six OPEC countries, including Iraq, Iran, Saudi Arabia, Kuwait, Algeria and Nigeria have been collected. The study uses Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests to establish Stationarity of the panel data regression model. Ordinary Least-Square (OLS), Fixed-Effects Model (FEM) And Random-Effects Model (REM) were used to find out Impact of Oil Price on GDP. To choose between Fixed-Effects Model and Random-Effects Model the Hausman test was applied because it has an asymptotic chi-square distribution. The results of Hausman test indicated that, the Random Effect Model was the most appropriate model for the study. The empirical results of the study indicated positive and a significant impact of oil price shocks on economic growth (GDP) of selected six OPEC countries. Key Words: Oil price shocks, OPEC Countries, GDP, Panel data and Unit Root.