Oil price volatility and its impact on economic growth and food security in Bangladesh

Oil price volatility and impact on growth and food security

  • Mousumi Saha Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202
  • Seikh Mohammad Sayem Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202
  • A. K. M. Abdullah Al-Amin Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh-2202
  • Shankar Majumder Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202
Keywords: Economic growth; Econometric modeling; Food security; Oil price volatility

Abstract

This study empirically examines oil price volatility and the impact of oil price changes on the growth of the economy and food security in Bangladesh. The study uses yearly data of macroeconomic variables from 1991 to 2015 and global food security index (GFSI) for the period 2012 to 2015. Furthermore, data of GFSI for previous four years have been simulated using exponential model. The GARCH (2, 1) model with minimum AIC postulates that volatility was high in the previous period and it has been continued to be lower in the current period (i.e. 2015). The co-integration test and error correction model exhibit that both in short-run and long-run case the increasing oil price negatively affected the growth of the economy. The simultaneous equations regression model using three-stage least squares estimator discloses that an increase in oil price declines the economic growth and food security simultaneously and significantly. Moreover, this study suggests that oil price volatility is not a good sign for the economy of Bangladesh, since, the country is an importer of crude oil, government policy should be quick responsive in relation to international oil market to create consistent oil market and sustainable economic development in Bangladesh.

J. Bangladesh Agril. Univ. 16(3): 482–491, December 2018

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Author Biographies

Mousumi Saha, Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202

Department of Agricultural Statistics

Seikh Mohammad Sayem, Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202

Department of Agricultural Statistics

A. K. M. Abdullah Al-Amin, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh-2202

Department of Agricultural Economics

Shankar Majumder, Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh-2202

Department of Agricultural Statistics

Published
2018-12-28
How to Cite
Saha, M., Sayem, S., Al-Amin, A. K. M., & Majumder, S. (2018). Oil price volatility and its impact on economic growth and food security in Bangladesh. Journal of the Bangladesh Agricultural University, 16(3), 482-491. https://doi.org/10.3329/jbau.v16i3.39446
Section
Economics and Rural Sociology