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Exploring the oil price and real GDP nexus for a small Island economy, the Fiji Islands

Prasad, Arti D. and Narayan, P.K. and Narayan, Jashwini J. (2007) Exploring the oil price and real GDP nexus for a small Island economy, the Fiji Islands. Energy Policy, 35 (12). pp. 6506-6513. ISSN 0301-4215

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Abstract

The goal of this paper is to examine the relationship between real GDP and oil prices using time series data for the period 1970–2005. Our main finding is that an increase in oil has a positive, albeit inelastic, impact on real GDP, inconsistent with the bulk of the literature. We argue that this is not a surprising result for the Fiji Islands. Our central argument focuses on two aspects of the Fijian economy: (1) the fact that actual output in Fiji has been around 50 per cent less than potential output; thus, Fiji's actual output has not reached a threshold level at which oil prices can negatively impact output; and (2) a rise in oil prices filters through to value added, which in turn is reflected in a larger actual output.

Item Type: Journal Article
Subjects: A General Works > AI Indexes (General)
Divisions: Faculty of Business and Economics (FBE) > School of Management and Public Administration
Faculty of Business and Economics (FBE) > School of Economics
Depositing User: Ms Mereoni Camailakeba
Date Deposited: 20 Jan 2007 11:17
Last Modified: 07 Oct 2013 15:45
URI: http://repository.usp.ac.fj/id/eprint/66
UNSPECIFIED

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