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On the Impact of Policy Uncertainty on Oil Prices: An Asymmetry Analysis

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  • Mohsen Bahmani-Oskooee

    (The Center for Research on International Economics and Department of Economics, The University of Wisconsin-Milwaukee Milwaukee, Milwaukee, WI 53201, USA)

  • Hanafiah Harvey

    (Department of Economics, Penn State University Mont Alto, Mont Alto, PA 17237, USA)

  • Farhang Niroomand

    (School of Business Administration, University of Huston-Victoria, Victoria, TX 77901, USA)

Abstract

Previous research has assessed the impact of policy uncertainty on a few macro variables. In this paper, we consider its impact on oil prices. Oil prices are usually determined in global markets by the law of demand and supply. Our concern in this paper is to determine which country’s policy uncertainty measure has an impact on oil prices. Using both the linear and the nonlinear Autoregressive Distributed Lag (ARDL) methods, we find that while policy uncertainty measures of Canada, China, Europe, Japan, Russia, South Korea, and the U.S. have short-run effects, short-run effects last into the long-run asymmetric effects only in the case of China. This may reflect the importance and recent surge in China’s engagement in world trade.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Hanafiah Harvey & Farhang Niroomand, 2018. "On the Impact of Policy Uncertainty on Oil Prices: An Asymmetry Analysis," IJFS, MDPI, vol. 6(1), pages 1-11, January.
    • Handle: RePEc:gam:jijfss:v:6:y:2018:i:1:p:12-:d:128355
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    2. Assaf, Ata & Charif, Husni & Mokni, Khaled, 2021. "Dynamic connectedness between uncertainty and energy markets: Do investor sentiments matter?," Resources Policy, Elsevier, vol. 72(C).
    3. M Bahmani-Oskooee & H Harvey, 2023. "Whose Policy Uncertainty Matters in the Trade between Mexico and the US?," Economic Issues Journal Articles, Economic Issues, vol. 28(2), pages 39-69, September.
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    6. Nusair, Salah A. & Olson, Dennis & Al-Khasawneh, Jamal A., 2024. "Asymmetric effects of economic policy uncertainty on demand for money in developed countries," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    7. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, January.
    8. Gabriel Caldas Montes & Pedro Salgado, 2024. "Economic policy uncertainties and business confidence in Japan," Economics Bulletin, AccessEcon, vol. 44(1), pages 38-56.
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    11. Nusair, Salah A. & Al-Khasawneh, Jamal A., 2022. "Impact of economic policy uncertainty on the stock markets of the G7 Countries:A nonlinear ARDL approach," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    12. Arida, Agustina & Masbar, Raja & Majid, M. Shabri Abd. & Indra, I., 2023. "Does vertical asymmetric price transmission exist in the rice markets?," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(1), March.
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