The Effect of Oil Production on Various Macroeconomic Factors: The Case Study of the Economy of Kazakhstan

Abstract

This thesis analyses the effect of oil prices on GDP, inflation, and the exchange rate in the case of the Republic of Kazakhstan, based on quarterly data from 2000 Q1 to 2022 Q4. To estimate to what extent oil prices affect the economic aggregators of Kazakhstan, the Vector Autoregression Model (VAR) is implemented. The findings disclose the presence of statistically significant Granger Cause running from oil prices to the exchange rate, inflation, and GDP. Based on the outcome of IRFs and VD, it has been found that there is a positive impact of oil prices on inflation and GDP; conversely, the effect between oil prices and the exchange rate has been found to be negative. Additionally, we can summarise that changes in oil prices greatly contribute to the fluctuations in GDP; however, the contribution of oil prices is fainter in terms of the exchange rate and inflation.