Natural resources commodity prices volatility and economic uncertainty: Evaluating the role of oil and gas rents in COVID-19

Wenwen Liu and Xue Chen

Resources Policy, 2022, vol. 76, issue C

Abstract: Indeed, natural resources are the most tradable goods across the globe and are responsible for running the industrial sector of each country. However, with the recent outbreak of Covid-19, the demand and supply chain of natural resources is greatly influence and causes economic recession, which needs to be addressed. The Covid-19 pandemic increases uncertainty in the global economic policy and natural resource commodity prices. Although the literature provides empirical outcomes in the pre-Covid-19 period, still the influence in the Covid-19 remained unexplored and needs further research. In this regard, the current study examined the US natural resources commodity price volatility and global economic uncertainty while utilizing the monthly dataset from November 01, 2007, to May 01, 2021. Using the wavelet power spectrum and wavelet coherence approaches, the empirical findings of the wavelet power spectrum reveal volatilities in the global economic policy uncertainty and crude oil price in the short run. In contrast, the oil rent, natural gas rents and total natural resources show long-run vulnerabilities. Additionally, the wavelet coherence unveils bidirectional causal association global economic policy uncertainty and other variables. However, the causal influence of global economic performance is found higher than the others. Besides, the crude oil prices and oil rents are associated with global economic policy uncertainty after the Covid-19 pandemic. These findings could have essential economic and energy implications for governors, policymakers, and researchers.

Keywords: Economic policy uncertainty; Crude oil; Natural resources rent; Natural gas rent; Wavelet power spectrum; Wavelet coherence (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:76:y:2022:i:c:s0301420722000320

DOI: 10.1016/j.resourpol.2022.102581

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