GRM 2010 GRM 2011

Abstract Details

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Upgrading Refinery Capacity in Kuwait: An Assessment of Effectiveness of thePlan to Counter Effects of Fluctuations in Oil Prices
Paper Proposal Text :
One of the main implications of low and declining crude oil prices for oil exporting economies is the uncertain revenue flows and consequent fiscal constraints. Export of refined oil products is one of the options to ensure higher return per barrel of oil. In this context, Kuwait has invested in expanding existing refinery capacity, which is expected to be completed by 2018. In addition, a new refinery is being that is expected to be operational by 2019. These expansions will upgrade Kuwait’s refinery capacity from 0.9 to 1.4 million barrels per day; almost 50% of Kuwait’s current crude oil production. This paper uses a recently estimated macroeconometric (ME) model for Kuwait to forecast the effects of anticipated expansion in refined oil products’ production in terms of performance of selected indicators for both private and public sectors of the Kuwaiti economy under different oil price and policy responses scenarios. The model takes account of key characteristics of the Kuwaiti economy such as the division between public and private sectors, consists of four main modules (a module for the labor market, a fiscal module that, a monetary module for money, interest rates and the exchange rate, and a prices module), and reflects developments in the macroeconomic theory and applied econometric, such as non-stationarity, co-integration, and error-correction. The estimated model is based on recent annual time series data up to 2012.