Economic Activity and Natural Gas as a Potential Destabilizer of the Slovenian Economy

by Festic, Mejra and Repina, Sebastijan
Published in Romanian Journal of Economic Forecasting
, 2009, volume 12 issue 4, 132-152

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This article empirically  investigates whether natural gas has the  potential of destabilizing the Slovenian economy. The  results confirmed the indirect relation  that the increase in gas prices decelerates  the dynamics of aggregate domestic consumption, which further decelerates  activities in individual industries. An  empirical analysis has proven that the natural gas  does have the potential of forecasting  the production trends in individual  industries within the Slovenian economy.  By using the dynamics of natural gas price movements  (and other explanatory variables), we can forecast the dynamics of movements in the  production of textiles, leather, fur and clothes, rubber and plastic-based  products, metals, furniture, as well as  in the processing industry, recycling,  electricity, natural gas, steam and hot  water supplies in Slovenia. The obtained results suggest that natural  gas price shocks can influence economic activity beyond those explained by direct  input cost effects and via the indirect  effect of possibly delaying the purchase of  goods.

Keywords: natural gas prices, production  by industries, energy supply, aggregate  domestic consumption
JEL Classification:
C2, E0, E3, Q4