IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v36y2025i6p3067-3086.html
   My bibliography  Save this article

The effect of gas and oil prices on economic confidence: An empirical analysis for euro area

Author

Listed:
  • Sabri Burak Arzova
  • Hasan Murat ErtuÄŸrul
  • Bertaç Åžakir Åžahin

Abstract

Energy prices are determinants of economic confidence by directly affecting production, consumption, and transportation costs. Nevertheless, countries’ energy policies and macroeconomic and geopolitical developments may moderate the impact of energy prices on economic confidence. This study analyzes the effects of oil and gas prices on business and confidence in the Euro Area over the period 1994–2023. We employ non-linear correlation and regression models to investigate the spillover relationship between the variables. For this purpose, the Markov Switching Regression (MSR) model is employed to analyze the spillover effect of oil and gas prices on both consumer and business confidence. The empirical results show that oil and gas prices harm consumer confidence in all regimes. Oil prices have a positive effect on business confidence in a volatility regime. However, oil prices negatively affect business confidence in low volatility, but this effect is insignificant. The effect of gas prices on the business confidence index is negative and statistically significant during periods of high volatility. Besides, gas prices positively affect business confidence for low volatility.

Suggested Citation

  • Sabri Burak Arzova & Hasan Murat ErtuÄŸrul & Bertaç Åžakir Åžahin, 2025. "The effect of gas and oil prices on economic confidence: An empirical analysis for euro area," Energy & Environment, , vol. 36(6), pages 3067-3086, September.
    • Handle: RePEc:sae:engenv:v:36:y:2025:i:6:p:3067-3086
    DOI: 10.1177/0958305X231222166
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0958305X231222166
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0958305X231222166?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:engenv:v:36:y:2025:i:6:p:3067-3086. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.