Domestic Macroeconomic Adjustment to Oil Price Shocks Under Different Exchange Rate Regimes in Malaysia

  • Fumitaka Furuoka Universiti Malaysia Sabah
  • Wong Hock Tsen School of Business and Economics Universiti Malaysia Sabah
  • Chong Hui Ing School of Business and Economics Universiti Malaysia Sabah
  • Ting Siew King School of Business and Economics Universiti Technology MARA

Abstract

This study examined the insulation properties of flexible exchange rate regime and fixed exchange rate regime in response to the oil price shocks in Malaysia. A monthly time series data for the period 1980- 2005 was used to examine whether the response of output, exchange rate and price levels to the oil price shocks were different across the exchange rate regimes. For this purpose, this study employed the structural vector autoregressive model. Empirical results indicated that the short-run output responses to the oil price shocks are smoother under the flexible exchange rate regime compared to the situation under the fixed exchange rate regime.

 

Published
2020-02-26
How to Cite
FURUOKA, Fumitaka et al. Domestic Macroeconomic Adjustment to Oil Price Shocks Under Different Exchange Rate Regimes in Malaysia. Malaysian Management Journal, [S.l.], v. 11, n. 1&2, p. 1-10, feb. 2020. ISSN 2289-6651. Available at: <http://e-journal.uum.edu.my/index.php/mmj/article/view/8944>. Date accessed: 06 july 2020.