Exploring the oil price and real GDP nexus for a small island economy, the Fiji Islands

Arti Prasad, Paresh Kumar Narayan, Jashwini Narayan

Research output: Contribution to journalArticleResearchpeer-review

29 Citations (Scopus)

Abstract

The goal of this paper is to examine the relationship between real GDP and oil prices using time series data for the period 1970-2005. Our main finding is that an increase in oil has a positive, albeit inelastic, impact on real GDP, inconsistent with the bulk of the literature. We argue that this is not a surprising result for the Fiji Islands. Our central argument focuses on two aspects of the Fijian economy: (1) the fact that actual output in Fiji has been around 50 per cent less than potential output; thus, Fiji's actual output has not reached a threshold level at which oil prices can negatively impact output; and (2) a rise in oil prices filters through to value added, which in turn is reflected in a larger actual output.

Original languageEnglish
Pages (from-to)6506-6513
Number of pages8
JournalEnergy Policy
Volume35
Issue number12
DOIs
Publication statusPublished - Dec 2007
Externally publishedYes

Keywords

  • Fiji
  • GDP
  • Oil prices

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