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What Affects the Relationships between Oil and Industrial Sector? Case of Eurozone

Author

Listed:
  • Melik Kamisli
  • Serap Kamisli
  • Fatih Temizel
  • Ethem Esen

Abstract

Oil, which is one of the fundamental energy sources, is an important cost item especially for industrial sector. Increases in oil prices decrease the profits of the firms by causing increase in the production costs. For this reason, it is claimed that there is a strong relationship between oil price and industrial sector profitability. On the other hand, oil is an alternative investment vehicle that can be included to the portfolio. Therefore, in this study the relationships between oil price and industrial sector returns of European countries are analyzed with Maki (2012) cointegration test under multiple structural breaks, on the basis of European Debt Crisis. The results show that announcements of credit rating agencies, elections, resignations, announcements of European Central Bank and IMF, recovery packages and economic developments cause structural breaks in relationships. Results also indicate that there is no cointegration between oil price and industrial sector returns of Austria, Belgium and Holland.

Suggested Citation

  • Melik Kamisli & Serap Kamisli & Fatih Temizel & Ethem Esen, 2017. "What Affects the Relationships between Oil and Industrial Sector? Case of Eurozone," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(9), pages 52-59, September.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:9:p:52-59
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    oil price; cointegration; structural break; diversification;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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