Abstract

http://ssrn.com/abstract=1794269
 


 



Oil Prices and the Impact of the Financial Crisis of 2007-2009


A. (Tassos) G. Malliaris


Quinlan School of Business

Ramaprasad Bhar


University of New South Wales (UNSW) - School of Banking and Finance

December 10, 2010

Energy Economics, 2011

Abstract:     
Oil prices increased dramatically during 2004-6. Industry experts initially attributed these price increases to fundamental factors such as the rise in global demand, but also because of disruptions in the supply of oil. The price increases however were so substantial that additional factors are needed to explain such dramatic changes. We propose that the decline in the value of the U.S. dollar measured both by the appreciation of the Euro and of gold prices, played an important role as oil suppliers demanded compensation for the declining value of the dollar. Using a Markov switching regime methodology we find evidence that this hypothesis is true prior to the financial crisis, but its validity does not hold after the crisis when oil prices crashed and the dollar rallied.

Number of Pages in PDF File: 21

Keywords: Oil prices, Euro, Gold, Time series analysis, Markov switching regimes

JEL Classification: C22, E44, G12

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Date posted: March 28, 2011 ; Last revised: April 2, 2011

Suggested Citation

Malliaris, A. (Tassos) G. and Bhar, Ramaprasad, Oil Prices and the Impact of the Financial Crisis of 2007-2009 (December 10, 2010). Energy Economics, 2011. Available at SSRN: http://ssrn.com/abstract=1794269

Contact Information

A. (Tassos) G. Malliaris (Contact Author)
Quinlan School of Business ( email )
1 E. Pearson Ave
Chicago, IL 60611
United States
312-915-6063 (Phone)
Ramaprasad Bhar
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Sydney, NSW 2052
Australia
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