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

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.

Role of oil price volatility, energy efficiency, and financial stability on sustainable energy production

“…Our suggested markers of tenuousness may help regulators better react to weather pattern issues that affect the stability conditions of monetary institutions, and help them develop suitable procedures for responding to weather pattern difficulties. Using our approach, we can construct the reloading period of the commodity response variable and focus critical information on item esteem co-advancements, which we show are impacted by energy production-related elements and, more strangely, are inconsequential (Yu et al, 2022).…”

“…Due to this, our research looks valuable in filling the current vacuum as it offers insight into the impact of innovation policies on renewable energy production and the shift away from fossil fuel-based energy sources (Bourghelle et al, 2021). Much theoretical work focused on the influence of energy policies on the implementation of renewable energy or the variables that led to its diffusion and progress (Yu et al, 2022). Nevertheless, research on the connection between energy policy and technological diffusion has received almost little attention.…”

How Energy Sector Reacted to COVID‐19 Pandemic? Empirical Evidence from an Emerging Market Economy

“…erefore, the findings of this study can help investors optimize their portfolios while also providing guidance to decision-makers and regulators. In addition, in order to help the oil market, governments may relax quarantine restrictions and reopen their businesses [12].…”

“…e return of global activity, as the restrictions imposed by the pandemic were lifted and the economies were completely reopened, led to a quick increase in demand for natural gas, both for electricity generation and for industrial purposes. In this regard, Yu et al [12] claimed that throughout critical situations, natural resource commodities have shown to be extremely volatile. Also, the dramatic drop in crude oil prices has a substantial adverse effect on the low-carbon economy [13].…”

“…Crude oil prices shape macroeconomic dynamics by affecting monetary policy instruments, inflation, as well as other business activity, in addition to their impact on corporate earnings [25]. For the reason that oil price shifts have such a large impact on macroeconomic performance, exploring this effect and predicting how vulnerable economic development will be during crises is critical [12]. is research adds to the existing body of knowledge in a number of ways.…”