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Does COVID-19 pandemic cause natural resources commodity prices volatility? Empirical evidence from China

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  • Guo, Shanwen
  • Wang, Qibin
  • Hordofa, Tolassa Temesgen
  • Kaur, Prabjot
  • Nguyen, Ngoc Quynh
  • Maneengam, Apichit

Abstract

COVID-19 pandemic caused havoc around the globe in both economic and non-economic sectors. This paper, unlike previous studies, evaluates the role of COVID-19 on the volatility in natural resources. The volatility of natural resources commodity prices has been the center of discussion, especially during the pandemic. Unlike previous studies, this study aims to evaluate the role of the pandemic, i.e., Covid-19 and its possible impact on volatility in natural resources commodity prices for China. China has been the center of this epidemic disease and is considered one of the major economies affected by the Covid-19; therefore, it is better to conduct this study for China. This study uses data from January 2020 till September 2021 to capture the peak time of Covid-19. Moreover, this study employs the novel wavelet power spectrum and wavelet coherence approach to better capture volatility within commodity prices volatility and Covid-19 and evaluate the association between both variables. The empirical results reveal that only natural resources commodity prices are volatile and only short. While Covid-19 positive cases and Covid-19 deaths are not vulnerable during the study period. Moreover, the wavelet coherence conforms that both Covid-19 positive cases and Covid-19 deaths significantly cause volatility in natural resources commodity prices. Although, volatility is found at different periods; still, volatility is observed only in the short-run. The study also provides relevant policy implications to ensure a relevant and timely solution for the existing issue. Moreover, future research guidelines and the study's limitations are also provided.

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  • Guo, Shanwen & Wang, Qibin & Hordofa, Tolassa Temesgen & Kaur, Prabjot & Nguyen, Ngoc Quynh & Maneengam, Apichit, 2022. "Does COVID-19 pandemic cause natural resources commodity prices volatility? Empirical evidence from China," Resources Policy, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:jrpoli:v:77:y:2022:i:c:s0301420722001696
    DOI: 10.1016/j.resourpol.2022.102721
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