Analyzing causality between epidemics and oil prices: Role of the stock market

Bo Sui, Chun-Ping Chang, Chyi-Lu Jang and Qiang Gong

Economic Analysis and Policy, 2021, vol. 70, issue C, 148-158

Abstract: This research investigates the impacts of three categories of epidemics on crude oil price using both an interaction term as well as a system of simultaneous equations, employing data from throughout the world for the period 1976 to 2018. Our empirical evidence confirms that epidemic strength is a key factor influencing oil price, and that the effect spreads from the stock market due to speculative investor behavior. Considering the wide heterogeneity of national development and income, the contagion channel of the stock market does not exhibit differences among countries based on variation in income level, but the influence of epidemics on oil price and on the contagion channel is significant in OECD countries. One policy implication is that countries should enact synergistic governance to prevent epidemic-based contagion. Moreover, national governments need to increase communication of information and decrease information asymmetry in the stock market.

Keywords: Epidemic; Oil price; Stock market (search for similar items in EconPapers)
JEL-codes: C32 O13 Q40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592621000242
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:70:y:2021:i:c:p:148-158

DOI: 10.1016/j.eap.2021.02.004

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().