Open AccessTHE IMPACT OF OIL PRICES ON INVESTMENT IN CROATIA
Author(s) -
Marina Lolić Čipčić
Publication year - 2021
Publication title -
diem
Language(s) - English
Resource type - Journals
eISSN - 1849-3645
pISSN - 1849-3653
DOI - 10.17818/diem/2021/1.11
Subject(s) - economics , investment (military) , oil price , vector autoregression , prosperity , monetary economics , consumption (sociology) , capital (architecture) , macroeconomics , economic growth , social science , sociology , politics , political science , law , archaeology , history
If we look at economic growth as a function of labour and capital then, aside from the labour force, investment is a key determinant of capital accumulation and, accordingly, a prerequisite for economic growth and prosperity. During the analysed period (1996:Q1-2015:Q4) investment in Croatia demonstrated pro-cyclically behaviour but showed a higher level of fluctuation then personal consumption or GDP. The aim of the paper is to examine the influence of oil prices on investment during the analysed period using Vector Autoregression (VAR) analysis and to determine the nature of their relationship by permuting four different oil price indicators. The results indicate that investment initially react positively to the growth of oil prices after which their reaction to oil price growth becomes negative (and more pronounced than the initial positive reaction). Contribution of oil price changes to investment fluctuations were also found. Keywords: investment, oil prices