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

Akbar Komijani, Nadiya Gandali Alikhani () and Esmaeil Naderi

MPRA Paper from University Library of Munich, Germany

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 (search for similar items in EconPapers)
JEL-codes: C13 C32 Q43 (search for similar items in EconPapers)
Date: 2012-10-04
New Economics Papers: this item is included in nep-ara and nep-ene
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Published in International Journal of Energy Economics and Policy 1.3(2013): pp. 43-50

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Journal Article: The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran (2013)
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