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Oil price and the stock market – cointegration test between the stock market, oil price, oil price uncertainty, interest rate, and real exchange rate
Jönköping University, Jönköping International Business School.
2020 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This master thesis investigates the relationship between the stock market and oil price, oil price uncertainty, interest rate, and real exchange rate in Denmark, Finland, Norway, and Sweden. The paper uses Autoregressive Distributed Lag (ARDL) and Fully Modified Ordinary Least Squares (FMOLS) to explore the cointegrating relationships between the stated variables. To find out more about the relationships the Toda-Yamamoto Granger causality test is applied to find the directional properties of the variables. The results show that oil price uncertainty has a broader relation to the stock markets compared to oil price itself. The Norwegian stock market is alone with a cointegrating relationship with oil price while the others show no signs of ditto. The relationship between the stock market and the interest rate is only present for Finland and Norway. At the same time, Denmark and Sweden have no cointegrated relationship, but the results from the Toda-Yamamoto show that there is some causal relationship present for all countries. The real exchange rate produces evidence for a cointegrated relationship with the stock market in all countries. These results can prove to be useful for investors when making an overall estimation of the market.

Place, publisher, year, edition, pages
2020. , p. 26
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-50439ISRN: JU-IHH-NAA-2-20200211OAI: oai:DiVA.org:hj-50439DiVA, id: diva2:1462504
Subject / course
JIBS, Economics
Presentation
2020-08-18, Zoom, Zoom, Jönköping, 14:00 (English)
Examiners
Available from: 2020-09-01 Created: 2020-08-30 Last updated: 2020-09-01Bibliographically approved

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  • nn-NB
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  • Other locale
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  • asciidoc
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