Impact Of Financial Crisis On Macroeconomic Variables In The MENA Region: The Case Of Oil Shocks

The impact of oil price shocks on the economy has occupied the attention of researchers for almost four decades. Majority of studies support the existence of a negative association while some recent evidences seem to have popularised the view that outcomes are the artefacts of misspecified functional forms. This study though similar in spirit to this popular opinion is however distinct in a number of ways. This paper explores alternative measures of oil price shocks that have been developed and used in the literature with a view to ascertaining the extent to which conclusions about the oil price-growth association depends on the definition of shocks adopted. More importantly this, to the best of our knowledge, is a pioneer attempt at introducing effects into the linkage between oil price shocks and output growth in MENA. The relatively recent regime dependent multivariate, together with the characteristic impulse response functions and forecast error variance decomposition, is adopted in this study.