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Do oil prices predict economic growth? New global evidence
journal contributionposted on 2014-01-01, 00:00 authored by Paresh Narayan, Susan SharmaSusan Sharma, W Poon, Joakim WesterlundJoakim Westerlund
In this paper, we test whether oil price predicts economic growth for 28 developed and 17 developing countries. We use predictability tests that account for the key features of the data, namely, persistency, endogeneity, and heteroskedasticity. Our analysis considers a large number of countries, shows evidence of more out-of-sample predictability with nominal than real oil prices, finds in-sample predictability to be independent of the use of nominal and real prices, and reveals greater evidence of predictability for developed countries.