The Impact of International Market Effects and Pure Political Risk on UK, EMU and the USA Oil and Gas Stock Market Sectors

12 Pages Posted: 22 Mar 2010

See all articles by John L. Simpson

John L. Simpson

Curtin University - Centre for Research in Applied Economics

Date Written: March 1, 2010

Abstract

A key question in European integration is whether or not the global oil and gas market sector (over the period which includes the oil price hikes of 2001 to late 2007 and the global financial crisis from mid 2008 to early 2009) has been impacted to a greater or lesser extent by major oil and gas stock market sectors (such as, those in the USA, the EMU and the UK) as well as political, social and legal factors (embodied in political risk ratings) for the USA, the UK and the key economies of the EMU (that is, France, Germany and Italy). This short study uses multivariate analysis of both unlagged and lagged data to test these relationships. All of this provides evidence that over the past 7 years in both oil and gas markets and in political environments, the USA and the UK oil and gas markets are closer to the world market than the EMU. In addition the UK has been closer to the USA politically and economically than it has been to the major EMU countries. This indicates that the UK is understandably not yet fully committed to take the next step in European integration by formally joining the EMU.

Suggested Citation

Simpson, John L., The Impact of International Market Effects and Pure Political Risk on UK, EMU and the USA Oil and Gas Stock Market Sectors (March 1, 2010). Available at SSRN: https://ssrn.com/abstract=1575387 or http://dx.doi.org/10.2139/ssrn.1575387

John L. Simpson (Contact Author)

Curtin University - Centre for Research in Applied Economics ( email )

GPO Box U1987
Perth, Western Australia 6845
Australia

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