This paper examines the economy-wide impacts of recent oil price shocks on the Malaysian economy. To achieve this objective, an integrated methodological framework that combines econometric and input–output models is utilized to assess the impacts of an oil price shock on tax
revenues, employment, labor income and gross domestic product (GDP). Our results reveal that the recent oil price shocks significantly affects these macroeconomic variables. The decline in oil prices from 2015 to 2016 reduces tax revenues by 10.5%, lower GDP by 1.9% and increases the unemployment
rate by 0.3%. As such, the sharp crunch in oil prices serves as a reminder to policymakers on the vulnerability inherent in overreliance on oil exports and the urgent need to diversify the economy.
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Document Type: Research Article
Department of Economics, Bauchi State University, Gadau, Nigeria
Faculty of Economics and Management, Universiti Putra Malaysia, Serdang, Malaysia
Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, Serdang, Malaysia
Publication date: July 4, 2017
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