Examining Rational Bubbles in Oil Prices: Evidence from Frequency Domain Estimates

Lawal, A. I. and Olayanju, T.M.A. and Salisu, Afeez Adebare and Asaleye, Abiola John and Dahunsi, S. O. and Dada, Adewumi O. and Omoju, Oluwasola Emmanel and Popoola, Olabisi (2019) Examining Rational Bubbles in Oil Prices: Evidence from Frequency Domain Estimates. International Journal of Energy Economics and Polic, 9 (2). pp. 166-173. ISSN 2146-4553

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Abstract

This study examined the existence of rational bubbles in oil prices by employing a frequency domain econophysics technique that have capacity to identify both explosive behaviour and bubbles in oil prices for the three largest oil future markets – WTI, Brent and OPEC basket. Our results show that the three prices experienced bubbles in four distinct periods. We attempt to provide some explanations on each of these bubbles using geopolitical, war and economic events. We equally noted that oil prices bubbles are largely influenced by the fact that oil is a major source of energy and is nonrenewable. The study observed that existence of bubbles have some economic consequences such as welfare loss resulting from distortion in prices and economic instability among others. We provide some policy recommendation

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory
Depositing User:	Mr DIGITAL CONTENT CREATOR LMU
Date Deposited:	16 Apr 2019 12:28
Last Modified:	11 Sep 2019 12:40
URI:	https://eprints.lmu.edu.ng/id/eprint/2103

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