 Resilience of energy market under geopolitical risks: What’s the policy implications?Jie Cao, Yingxin Zhu, Zhujia Yin, Jing Li and Chun-Ping Chang Economic Analysis and Policy, 2025, vol. 86, issue C, 1706-1724 Abstract: This paper studies the global energy market under geopolitical risk shocks from a novel perspective of resilience. Using the time-varying parameter factor-augmented vector autoregressive model, we quantify resilience by measuring the absorption duration and the intensity from temporal and magnitude aspects. We describe the resilience of the energy market over time. Sub-market analysis shows that the oil market has a longer recovery period but higher absorption intensity than the natural gas and coal markets. We also observe that the energy market exhibits different resilience to geopolitical threats versus actual geopolitical events. Furthermore, we show that market resilience is significantly correlated with hedge ratios and market returns, underscoring the critical role of resilience in risk management. Our study highlights the importance of understanding and measuring market resilience, which provides valuable insights for policymakers and investors to enhance the security and robustness of energy markets. Keywords: Energy market; Resilience; Geopolitical risk (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:86:y:2025:i:c:p:1706-1724 DOI: 10.1016/j.eap.2025.05.014 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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