Oil Price Shocks and Economic Growth Evidence from OPEC

Oil price fluctuations are one of the most important causes of economic crisis among both oil exporting and importing countries. Hence, study of oil price shocks on economy of oil exporting countries which oil revenues is the intensive generator is so vital. In this study, the effect of oil shocks on economic growth in selected OPEC member countries is studied; at first oil price shocks are extracted by Hodrick-Prescott filtering and then the effect of oil shocks on regarded variables are estimated by Vector Auto-regressive Model (VAR). The result of regression analysis show that Emirate and Iran are the most dependent to oil shocks; Indonesia and Ecuador is the least dependent. The experience of Indonesia shows that decreasing in oil dependence is not possible without taking correct policies.