Investigating the Asymmetric Effects of Oil Price Uncertainty on Corporates Investment

Document Type : Scientific paper

Authors

1 Associate Professor of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran

2 university of mazandaran

3 university of Mazandaran

Abstract

Considering the position of oil in the economy of countries with oil resources, oil price uncertainty is one of the important sources of risk and uncertainty that affects the investment decisions of companies. In addition, another important issue that should be considered in this regard is whether the companies' investment response to the positive and negative uncertainty is symmetric or asymmetric.  Considering that the chemical products industry has an important role in the economic development of the country and is also affected by the developments of other markets such as the oil market, in this study the asymmetric effects of Brent oil price uncertainty on the investment of chemical products group companies in the Tehran stock exchange has been investigated from 2010 to 2021. The research modeling is based on dynamic panel models and the calculation of oil price uncertainty has been done by the GARCH method. Relationships between variables have also been estimated using the Generalized Method of Moment (GMM). The results show that during the period under review, oil price uncertainty had a negative effect on corporate investment. On the other hand, the findings indicate that the positive and negative oil price uncertainty has an asymmetric effect on corporate investment.

Keywords

Main Subjects

References

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Macroeconomics Research Letter
Volume 18, Issue 40
December 2023
Pages 41-67

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History

  • Receive Date: 15 November 2023
  • Revise Date: 28 January 2024
  • Accept Date: 01 February 2024

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