Oil Price Shocks and Stock Markets

ABSTRACT: This study investigates long term relationship between output, oil price and stock market movements in the selected countries from different regions for comparison purposes such as Germany, Japan, Singapore, South Africa, Turkey, UK and USA. Using annual data from 1973 to 2010, empirical analysis shows that oil and stock markets are long term determinants in these countries. It is investigated that real income in these countries converges to its long term equilibrium level at reasonable levels through the channels of oil markets, stock markets, and business environment (as proxied by industrial value added). Keywords: Oil prices; Stock markets; Output; Bounds Tests; ECM. ……………………………………………………………………………………………………………………………………………………………………………………………………………………