Energy prices and stock markets: Does energy supply security matter?

Elif Hilal Nazlıoğlu, Dündar Kök and Uğur Soytaş

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study examines the interactions between stock markets, oil prices, and security of energy supply in 25 countries with the highest energy consumption from 1980 to 2018. We utilize bi- and multi-variate models with and without smooth structural breaks. The novel Fourier expansion to the Toda-Yamamoto causality procedure highlights the importance of smooth structural shifts in model specification. The new methodology uncovers significantly stronger impact of energy security on the causal link between energy and stock markets. Our results offer new and important implications for policymakers, investors, and researchers.

Keywords: Stock markets; Energy prices; Energy security; Causality (search for similar items in EconPapers)
JEL-codes: C22 G11 G15 Q43 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025007051

DOI: 10.1016/j.iref.2025.104542

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