The role of higher oil prices: A case of major developed countries

Terence O'Neill, Jack H W Penm, Richard Terrell

Research output: Chapter in Book/Report/Conference proceedingChapterResearchpeer-review

47 Citations (Scopus)

Abstract

The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations - measured by the difference between yields of inflation indexed and non-inflation indexed government bonds - over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.
Original languageEnglish
Title of host publicationResearch in Finance
EditorsA H Chen
Place of PublicationUK
PublisherEmerald Group Publishing Ltd.
Pages287-299
Number of pages13
Volume24
ISBN (Electronic)9781849505499
ISBN (Print)9780762313778
DOIs
Publication statusPublished - 2008

Fingerprint

Oil prices
Developed countries
Stock market returns
Inflation expectations
Energy resources
Canada
OECD countries
Long-term relationships
Capacity constraints
Government bonds
Inflation
Exporters
High inflation
France
Price expectations

Cite this

O'Neill, T., Penm, J. H. W., & Terrell, R. (2008). The role of higher oil prices: A case of major developed countries. In A. H. Chen (Ed.), Research in Finance (Vol. 24, pp. 287-299). UK: Emerald Group Publishing Ltd.. https://doi.org/10.1016/S0196-3821(07)00211-0
O'Neill, Terence ; Penm, Jack H W ; Terrell, Richard. / The role of higher oil prices : A case of major developed countries. Research in Finance. editor / A H Chen. Vol. 24 UK : Emerald Group Publishing Ltd., 2008. pp. 287-299
@inbook{d4c9aaf88e294968b07edcee51755b62,
title = "The role of higher oil prices: A case of major developed countries",
abstract = "The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations - measured by the difference between yields of inflation indexed and non-inflation indexed government bonds - over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.",
author = "Terence O'Neill and Penm, {Jack H W} and Richard Terrell",
year = "2008",
doi = "10.1016/S0196-3821(07)00211-0",
language = "English",
isbn = "9780762313778",
volume = "24",
pages = "287--299",
editor = "Chen, {A H}",
booktitle = "Research in Finance",
publisher = "Emerald Group Publishing Ltd.",
address = "United Kingdom",

}

O'Neill, T, Penm, JHW & Terrell, R 2008, The role of higher oil prices: A case of major developed countries. in AH Chen (ed.), Research in Finance. vol. 24, Emerald Group Publishing Ltd., UK, pp. 287-299. https://doi.org/10.1016/S0196-3821(07)00211-0

The role of higher oil prices : A case of major developed countries. / O'Neill, Terence; Penm, Jack H W; Terrell, Richard.

Research in Finance. ed. / A H Chen. Vol. 24 UK : Emerald Group Publishing Ltd., 2008. p. 287-299.

Research output: Chapter in Book/Report/Conference proceedingChapterResearchpeer-review

TY - CHAP

T1 - The role of higher oil prices

T2 - A case of major developed countries

AU - O'Neill, Terence

AU - Penm, Jack H W

AU - Terrell, Richard

PY - 2008

Y1 - 2008

N2 - The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations - measured by the difference between yields of inflation indexed and non-inflation indexed government bonds - over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.

AB - The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations - measured by the difference between yields of inflation indexed and non-inflation indexed government bonds - over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.

U2 - 10.1016/S0196-3821(07)00211-0

DO - 10.1016/S0196-3821(07)00211-0

M3 - Chapter

SN - 9780762313778

VL - 24

SP - 287

EP - 299

BT - Research in Finance

A2 - Chen, A H

PB - Emerald Group Publishing Ltd.

CY - UK

ER -

O'Neill T, Penm JHW, Terrell R. The role of higher oil prices: A case of major developed countries. In Chen AH, editor, Research in Finance. Vol. 24. UK: Emerald Group Publishing Ltd. 2008. p. 287-299 https://doi.org/10.1016/S0196-3821(07)00211-0