Oil price fluctuations and macroeconomic performance in Asian and Oceanic economies.

The aim of this study is to investigate the relationship between oil price fluctuations and three macroeconomic variables; economic output, inflation and unemployment rate for countries in ASEAN, the Asian-Oceanic region and South Asia. The key findings of this study indicate a positive impact of oil prices on the GDP of oil exporting countries; a short-run negative impact of an oil price shock to the GDP of small, open economies and an ambiguous effect of oil on the GDP for fast growing, large economies. There are no clear patterns in the relationships between oil price and the two remaining variables, CPI and unemployment. The empirical results show that the oil price-GDP relationship is significantly different for categories of countries with varied economic characteristics. Interestingly, small and open economies show that despite that the initial slowdown in GDP, economic activity recovers in the long-run, after an oil price shock. This may be attributed to the fact that their main trading partners are not greatly affected by oil price shocks, as supported by past studies.Bachelor of Art