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A quantitative study of the interactions between oil price and renewable energy sources stock prices

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  • Dominioni, Goran
  • Romano, Alessandro
  • Sotis, Chiari

Abstract

In this article, we apply an integrable nonautonomous Lotka-Volterra model to study the relationship between oil and renewable energy stock prices between 2006 and 2016. The advantage of this innovative approach is that it allows us to study the simultaneous interaction among n stock indices at any point in time. In line with previous studies, we find that the relationship between oil and renewables is characterized by major structural breaks taking place in 2008 and around 2013. The first structural break might be caused by the financial crisis, whereas more studies are required to advance a hypothesis on the causes behind the second structural break. Our main finding is that oil is always in a predator-prey relationship with wind, whereas it proceeds in mutualism with solar after 2012. Moreover, we find that solar and wind proceed in mutualism between 2008 and 2013 but have a rivalrous interaction before (competition) and after (predator-prey) that period. We explore the possible reasons behind these patterns and their policy implications.

Suggested Citation

  • Dominioni, Goran & Romano, Alessandro & Sotis, Chiari, 2019. "A quantitative study of the interactions between oil price and renewable energy sources stock prices," LSE Research Online Documents on Economics 100548, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:100548
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    Cited by:

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    4. Marco Tedeschi, 2023. "Idiosyncratic and systematic spillovers through the renewable energy financial systems," Working Papers 483, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. Alexandra Horobet & Georgiana Vrinceanu & Consuela Popescu & Lucian Belascu, 2019. "Oil Price and Stock Prices of EU Financial Companies: Evidence from Panel Data Modeling," Energies, MDPI, vol. 12(21), pages 1-17, October.
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    8. Talat S. Genc & Stephen Kosempel, 2023. "Energy Transition and the Economy: A Review Article," Energies, MDPI, vol. 16(7), pages 1-26, March.
    9. Elisa Di Febo & Matteo Foglia & Eliana Angelini, 2021. "Tail Risk and Extreme Events: Connections between Oil and Clean Energy," Risks, MDPI, vol. 9(2), pages 1-13, February.
    10. Atems, Bebonchu & Mette, Jehu & Lin, Guoyu & Madraki, Golshan, 2023. "Estimating and forecasting the impact of nonrenewable energy prices on US renewable energy consumption," Energy Policy, Elsevier, vol. 173(C).

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    Keywords

    Lotka-Volterra; oil prices; renewable energy;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General

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