Browsing by Author "Sengia, Laurence Arthur S."

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    Effect of coal price votality on industry output value
    (2026-06-10) Sengia, Laurence Arthur S.; Solon, Orville Jose C.
    This paper attempts to measure the effect of coal price volatility on the value of Philippine manufacturing output. Studies by Elder and Serletis (2010) and by Aye et al. (2014) suggest that energy price volatility can reduce manufacturing activity. This paper uses the real options framework of Dixit and Pindyck (1994), which explains how uncertainty can delay firms’ production and investment decisions, to frame the research question from which an empirical model is derived. This empirical model is estimated using monthly panel data on 22 Philippine manufacturing industries from 2018 to 2025, using fixed-effects panel regressions, and interaction specifications. Results suggest that after controlling for lending rates, inflation, exchange rate movements, producer prices, and fixed industry and year factors, coal price volatility has no statistically significant direct effect on manufacturing output value in the base model. However, the interaction model suggests that the effect of coal price volatility varies under different macroeconomic cost conditions, reflecting broader financing and price pressures faced by firms, particularly through its interaction with lending rates and inflation. This implies that coal price volatility does not affect manufacturing output value uniformly, but its impact may become more pronounced when combined with broader financing and price pressures on firms. Industry-level interaction results suggest stronger negative sensitivity in leather and footwear, transport equipment, wearing apparel, basic pharmaceutical products, and furniture, with weak evidence for coke and refined petroleum products.