The economic policy uncertainty, oil price volatility and economic growth of Vietnam


Authors

  • Ho Thi Lam University of Finance and Marketing
  • Hoang Kieu Bao Trinh University of Finance and Marketing
  • Bui Thi Hong Ngoc University of Finance and Marketing
  • Nguyen Tran Minh Hoai University of Finance and Marketing
  • Pham Thi Nghia University of Finance and Marketing
  • Bui Hoan My University of Finance and Marketing
DOI: https://doi.org/10.57110/jebvn.v4i1.246

Keywords:

Oil price volatility, economic policy uncertainty, economic growth

Abstract

This paper investigates the impacts of the economic policy uncertainty and oil price volatility on the economic growth of Vietnam. Using data from 1996 to 2021 and the Autoregressive Distributed Lag methodology (ARDL), we found that in the short run, the uncertainty of economic policy is a negative impact on economic growth in Vietnam. However, in the long run, this impact becomes positive, when economic agents can adjust production and consumption behavior following policy change. Additionally, this study also presents evidence that increased uncertainty of the oil price is associated with lower economic growth in Vietnam. Furthermore, we provide statistical evidence of the impacts of the unemployment rate, domestic investment, FDI, and government expenditure on the economic growth rate in Vietnam. From the research results, several policy implications are given to promote economic growth in the context of increasing macroeconomic instability

References

Abdelsalam, M. A. M. (2020). Oil price fluctuations and economic growth: The case of MENA countries. Review of Economics and Political Science, 8(5), 353-379. https://doi.org/10.1108/REPS-12-2019-0162

Akinsola, M., & Odhiambo, N. M. (2020). Asymmetric effect of oil price on economic growth: Panel analysis of low-income oil-importing countries. Energy Reports, 6, 1057-1066. https://doi.org/10.1016/j.egyr.2020.04.023

Akinlo, T., & Apanisile, O. T. (2015). The impact of volatility of oil price on economic growth in sub-Saharan Africa. British Journal of Economics, Management and Trade, 5(3), 338-349. https://doi.org/10.9734/BJEMT/2015/12921

Al-Sasi, B. O., Taylan, O., & Demirbaş, A. (2017). The impact of oil price volatility on economic growth. Energy Sources, Part B: Economics, Planning, and Policy, 12(10), 1-6. https://doi.org/10.1080/15567249.2017.1312641

Bhagat, S., Pulak, G., & Srinivasan, R. (2016). Economic policy uncertainty and growth in India. Economic and Political Weekly, 51(35), 72-81. https://doi.org/10.2139/ssrn.2246882

Baker, S., & Nicholas, B. (2013). Does uncertainty drive business cycles? Using disasters as natural experiments. NBER Working Paper, 19475. https://doi.org/10.3386/w19475

Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593-1636. https://doi.org/10.1093/qje/qjw024

Barro, R. J. (2006). Rare disasters and asset markets in the twentieth century. Quarterly Journal of Economics, 121(3), 823-866. https://doi.org/10.1162/qjec.121.3.823

Caggiano, G., Efrem, C., & Juan, M. F. (2017). Economic policy uncertainty and unemployment in the United States: A nonlinear approach. Economics Letters, 151, 31-34. https://doi.org/10.1016/j.econlet.2016.12.002

Cerda, R., Álvaro, S., & José, T. V. (2018). Impact of economic uncertainty in a small open economy: The case of Chile. Applied Economics, 50(26), 2894-2908. https://doi.org/10.1080/00036846.2017.1412076

Cheng, X., Wu, P., Liao, S. S., & Wang, X. (2023). An integrated model for crude oil forecasting: Causality assessment and technical efficiency. Energy Economics, 117, 106467. https://doi.org/10.1016/j.eneco.2022.106467

Han, S. J., & Qiu, J. R. (2007). Corporate precautionary cash holdings. Journal of Corporate Finance, 13, 43-57. https://doi.org/10.1016/j.jcorpfin.2006.05.002

Hu, S., & Gong, D. (2019). Economic policy uncertainty, prudential regulation, and bank lending. Finance Research Letters, 29, 373-378. https://doi.org/10.1016/j.frl.2018.09.004

Jurado, K., C. L. Sydney, & Ng, S. (2015). Measuring uncertainty. American Economic Review, 105(3), 1177-1216. https://doi.org/10.3386/w19456

Mo, B., Chen, C., Nie, H., & Jiang, Y. (2019). Visiting effects of crude oil price on economic growth in BRICS countries: Fresh evidence from wavelet-based quantile-on-quantile tests. Energy, 178, 234-251. https://doi.org/10.1016/j.energy.2019.04.162

Narayan, P. K., & Narayan, S. (2010). Modelling the impact of oil prices on Vietnam’s stock prices. Applied Energy, 87(1), 356-361. https://doi.org/10.1016/j.apenergy.2009.05.037

Narayan, P. K., Sharma, S., Poon, W. C., & Westerlund, J. (2014). Do oil prices predict economic growth? New global evidence. Energy Economics, 41, 137-146. https://doi.org/10.1016/j.eneco.2013.11.003

Ozoguz, A. (2009). Good times or bad times? Investors’ uncertainty and stock returns. Review of Financial Studies, 22(11), 4377-4422. https://doi.org/10.1093/rfs/hhn097

Sahinoz, S., & Cosar, E. E. (2018). Economic policy uncertainty and economic activity in Turkey. Applied Economics Letters, 25(21), 1517-1520. https://doi.org/10.1080/13504851.2018.1430321

Schaal, E. (2017). Uncertainty and unemployment. Econometrica, 85(6), 1675-1721. https://doi.org/10.3982/ECTA10557

Sum, V. (2012). Economic policy uncertainty and stock market performance: Evidence from the European Union, Croatia, Norway, Russia, Switzerland, Turkey, and Ukraine. Journal of Money, Investment and Banking, 25, 99-104. https://doi.org/10.2139/ssrn.2094175

Xu, Z. (2020). Economic policy uncertainty, cost of capital, and corporate innovation. Journal of Banking & Finance, 111, 105698. https://doi.org/10.1016/j.jbankfin.2019.105698

Downloads

Download data is not yet available.

Downloads

Published

25-02-2024

Abstract View

562

PDF Downloaded

249

How to Cite

Ho Thi Lam, Hoang Kieu Bao Trinh, Bui Thi Hong Ngoc, Nguyen Tran Minh Hoai, Pham Thi Nghia, & Bui Hoan My. (2024). The economic policy uncertainty, oil price volatility and economic growth of Vietnam. VNU JOURNAL OF ECONOMICS AND BUSINESS, 4(1), 51. https://doi.org/10.57110/jebvn.v4i1.246

Issue

Section

Original Article