Investigation of the Impact Oil Shocks on Current Account in OPEC Countries

In view of the importance of oil revenues in Gross Domestic Production(GDP), exports and financing the annual budget in OPEC members economies, oil price flactuation may have an important and fundamental effect on macroeconomic variables in these countries. The aftermath of oil price shocks is that the current account performance disturbs abruptly. This paper investigates the effect of oil price shocks on current account of balance of payments(BOP) for OPEC members in the period 1970-2006 by using panel data technique. After stationary test for variables used in model, and also Hausman test, we use Static panel(Fixed effect), and Dynamic panel techniques for estimating. Results show the direct relationship between oil price shocks and CA whereas a surge in oil price (positive oil shocks), increase the CA balance. In other hand, the relationship between CA and other variables government expenditure and trade openness is respectively negative and positive.