Impact of Oil Shocks and Instability of Economic Growth on Economic Resilience in OPEC Countries

The main aim of this paper is to estimate the relationship between instability of GDP per capita and fluctuations in the oil terms of trade (oil shocks) and economic resilience. Moreover, we consider the stabilizing role of resiliency in reducing the positive relationship between oil and instability of the economic growth. A positive correlation between oil term of trade shock and instability of the economic growth has proven with using OPEC countries’ data during 1995-2013. Effect of net economic resilience on the instability of economic growth is negative. In addition, the evidence shows that net economic resilience decreases the effect of shocks in oil terms of trade (oil shocks). A resilient economy can mitigate a part of the negative impact of oil shocks on growth fluctuations. Thus, the governments can improve the economic conditions with boosting economic resilience through better monetary and fiscal policies. Increasing efficiency in economic policies will decrease uncertainty among households and firms and will increase government credibility and leads to a positive effect of oil resources on sustainable growth.