Testing the fluctuations of oil resource price volatility: A hurdle for economic recovery

Xie Xiuzhen, Wenxiu Zheng and Muhammad Umair

Resources Policy, 2022, vol. 79, issue C

Abstract: The influence of oil price volatility on significant international macroeconomic indicators is examined empirically. The vector auto-regression (VAR) system is used to examine the influence of oil price volatility. According to the Granger causality test, impulse response functions, and variance decomposition, economic recovery and investment have been significantly affected by oil price volatility from 2000Q1 to 2020Q4. According to this research, business investment and oil prices have shown great power throughout the international economic meltdown. Volatility in economic activity and oil prices are expected during this crisis, according to the recent COVID-19 outbreak. Furthermore, in the international financial crisis and COVID-19 crises, oil prices and economic growth are strongly linked. We propose that the COVID-19 epidemic and the global financial problems have major effects on economic activity when oil prices fall. The COVID-19 epidemic had the greatest total connectedness between oil prices and economic activities, which suggests that the speed of information propagation between the oil market and financial initiatives was greater during the COVID-19 outbreak than during past global financial crises. There are important consequences for policymakers based on the findings of this research.

Keywords: Oil price volatility; COVID-19; Economic performance; Financial initiatives (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (169)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:79:y:2022:i:c:s0301420722004251

DOI: 10.1016/j.resourpol.2022.102982

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