Oil price shocks on economic growth and the stock market: Evidence from Brazil and the US

Andre Varella Mollick and Andre Coelho Vianna

Chapter 14 in Income Distribution, Economic Growth and Unemployment, 2025, pp 299-328 from Edward Elgar Publishing

Abstract: This study analyzes the impact of oil price shocks on stock returns, inflation, and output growth in Brazil and the US using a structural vector autoregression (SVAR) model with monthly data from 1995 to 2019. The analysis identifies two distinct periods: 1995–2009 and 2010–2019, the latter capturing the shift in the US towards being a major oil producer. The results show that: (1) US output responds positively and persistently to oil price shocks only after 2010; (2) impulse responses are larger in the post-2010 period, with positive effects on stock returns in both countries; (3) stock market growth in 2010–2019 reacts positively to oil price shocks, but only immediately in Brazil and for a shorter period in the US. These findings suggest that the more innovative US economy experiences larger spillover effects of oil price shocks on output growth and stock markets.

Keywords: Brazil; Inflation; Output growth; Stock markets; United States; WTI oil prices (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035342556
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