The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran


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Authors

  • Akbar Komijani
  • Nadiya Gandali Alikhani
  • Esmaeil Naderi

Abstract

Substituting crude oil exports with value-added petrochemical products is one of the main strategies for policy makers in oil-driven economies to isolating the real sectors of economy from oil price volatility. This policy inclination has led to a body of literature in energy economics in recent decades. As a case study, this paper investigates the short-run and long-run relationship between Iran’s oil price and methanol price which is one of the most important non-oil exports of the oil-exporting country. To do so, the weekly data from 18 Jan. 2009 to 18 Sep. 2011 in a VECM framework is applied. The results show that in the long-run, oil price hikes leads to proportional increase in methanol price while in the short-run, this impact is not significant. Keywords: Crude Oil; Methanol; VECM Model JEL Classifications: Q43; C1; C32

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Author Biography

Esmaeil Naderi

Faculty of Economics, University of TehranRanking: 301-400 in Shanghai Ranking of University

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Published

2012-12-08

How to Cite

Komijani, A., Alikhani, N. G., & Naderi, E. (2012). The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran. International Journal of Energy Economics and Policy, 3(1), 43–50. Retrieved from https://www.econjournals.com/index.php/ijeep/article/view/344

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