HOW OIL PRICES IMPACT THE ECONOMIC GROWTH OF VENEZUELA

Energy, which is one of the indispensable elements of economic and social development, is provided by fossil resources such as coal, and natural gas. The coal, the main energy source of the First Industrial Revolution, was replaced by oil from the end of the 19th century. Although consumption patterns have changed over time and new energy sources have emerged, oil has not lost its importance today. The aim of this study was to determine the effect of the changes in oil prices on economic growth in Venezuela for the period 1980-2014. The reason for the fact that this period used in the analysis is limited with 2014 is due to the inaccessibility of these data. Dickey-Fuller Unit Root Test and Philips-perron Unit Root Tests were used in this study. When the series were found to be stationary at the first level, Johansen Cointegration Test was performed. As a result of the analysis, it is seen that there is a cointegration relationship between the variables in the long term, whereas in the causality research, one-way causality relationship from oil prices to economic growth has been determined. Then Granger Causality analysis was used.

Keywords

Granger Causality Analysis, Johansen Cointegration Test, Oil Prices, Time Series Analysis, Venezuela