Oil price, US stock market and the US business conditions in the era of COVID-19 pandemic outbreak

Shunsuke Managi, Mohamed Yousfi, Younes Ben Zaied, Nejah Ben Mabrouk, Béchir Ben Lahouel

Research output: Contribution to journalArticlepeer-review

Abstract

This paper contributes to Covid-19 outbreak impacts literature. We investigate the connectedness between stock market and oil prices under bullish and bearish economic conditions and uncertainty level at different investment horizons. We applied the wavelet framework on daily dataset cover the pre-COVID-19 and COVID-19 period. We find that the linkage between the economic and financial pairs is characterized by significant changes over the time during the sample period, where the huge co-movements has been identified during the pandemic period at the low scale. We show that due to lockdown policy and oil price shock, the stock return decline, the aggregate business conditions reached its lowest level and the uncertainty increase. The result indicates that the COVID-19 outbreak negatively affects the economy and the financial markets and support the sensitivity, especially between oil-stock, and economic condition and uncertainty.

Original languageEnglish
Pages (from-to)129-139
Number of pages11
JournalEconomic Analysis and Policy
Volume73
DOIs
Publication statusPublished - Mar 2022

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

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