The non-linear impact of oil price on the oil demand

ABSTRACT

A panel smooth transition regression model was adopted to analyse the non-linear impact of oil prices on oil demand. Data for 42 countries was obtained from the International Energy Agency for the time period spanning from January 1990 to June 2017. The results indicate that a threshold value does exist. Furthermore, when the oil price was lower than this threshold value, a positive relationship between oil price and oil demand was observed. When the price of oil was higher than the threshold value, however, a negative relationship between price and demand was found.

KEYWORDS:

• Crude oil price
• crude Oil Demand
• nonlinear Relationship
• panel Smooth Transition Regression (PTSR)

JEL CLASSIFICATION:

• C19
• C24
• C54
• K32
• C40

Disclosure statement

No potential conflict of interest was reported by the authors.