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Oil prices volatility and economic performance during COVID-19 and financial crises of 2007–2008

Yang Yu, SongLin Guo and XiaoChen Chang

Resources Policy, 2022, vol. 75, issue C

Abstract: We examine the time-frequency dynamics of spillovers between oil price shocks and economic performance globally. We use both time and frequency domains simultaneously to find the response of macroeconomic performance to changes in oil prices during the global financial and pandemic crises. Using Wavelet analysis, this seminal study explores the connectedness between oil price shocks and economic activities during COVID-19 and the financial crises of 2008. This study finds that both economic activities and oil prices have shown high power during the period of global financial crises. The recently COVID-19 outbreak indicates significant volatility in economic activities and oil prices during the period of crisis. Moreover, we observe a strong interconnectedness between oil prices and economic activities during global financial crises and COVID-19 crises. We argue that a shock to oil prices in global financial crises and the COVID-19 outbreak has serious repercussions for economic activities. The highest total connectedness between oil prices and economic activities is observed during the COVID-19 outbreak, which advocates that the speed of information transmission amid oil prices and economic activities is greater in the era of the COVID-19 outbreak as compared to other global financial crises. The results of this study have significant implications for policymakers.

Keywords: Oil price shocks; Economic performance; Global financial crises; COVID-19; Wavelet analysis (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.resourpol.2021.102531

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