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Oil prices and stock markets: A review of the theory and empirical evidence.

Degiannakis, S., Filis, G. and Arora, V., 2018. Oil prices and stock markets: A review of the theory and empirical evidence. Energy Journal, 39 (5), 85-130.

Full text available as:

EJ manuscript_pre-print.pdf - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.


DOI: 10.5547/01956574.39.5.sdeg


Do oil prices and stock markets move in tandem or in opposite directions? The complex and time varying relationship between oil prices and stock markets has caught the attention of the financial press, investors, policymakers, researchers, and the general public in recent years. In light of such attention, this paper reviews research on the oil price and stock market relationship. The majority of papers we survey study the impacts of oil markets on stock markets, whereas, little research in the reverse direction exists. Our review finds that the causal effects between oil and stock markets depend heavily on whether research is performed using aggregate stock market indices, sectoral indices, or firm-level data and whether stock markets operate in net oil-importing or net oil-exporting countries. Additionally, conclusions vary depending on whether studies use symmetric or asymmetric changes in the price of oil, or whether they focus on unexpected changes in oil prices. Finally, we find that most studies show oil price volatility transmits to stock market volatility, and that including measures of stock market performance improves forecasts of oil prices and oil price volatility. Several important avenues for further research are identified.

Item Type:Article
Uncontrolled Keywords:Oil prices, stock markets, interconnectedness, forecasting, oil-importers, oil-exporters
Group:Bournemouth University Business School
ID Code:30894
Deposited By: Symplectic RT2
Deposited On:22 Jun 2018 10:38
Last Modified:14 Mar 2022 14:11


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