Abstract
<p> <h3> Purpose </h3></p><p> Quantitative easing (QE) allowed the US economy to stabilize and return to slow growth. Oil prices increased to $100 during 2010–2013. Then in June 2014, they plunged again dramatically to $40. The purpose of this paper is to develop and test a model that describes the price of oil as depending on six inputs: Federal assets accumulated by the Federal Reserve during the period of QE, the 10-Year Treasury note rate, the price of copper, the trade-weighted dollar, the S&P 500 Index and the US high yield rate for bonds rated CCC or below. <h3> Design/methodology/approach </h3></p><p> We use 771 overlapping 52-week regressions to capture short-run oil price dynamics. <h3> Findings </h3></p><p> We find that QE was statistically significant only during 2009–2010, while the US high yield rate played a more significant role, both during and after the crisis. <h3> Research limitations/implications </h3></p><p> This paper does not explain the behavior of oil prices prior to 2003. <h3> Practical implications </h3></p><p> This paper emphasizes the role of the high yield rate on fracking technology in financing the extraction and production of oil. <h3> Originality/value </h3></p><p> The paper has both the theoretical value for researchers in the area of energy, as well as practical application for the oil industry.</p>
| Original language | American English |
|---|---|
| Journal | School of Business: Faculty Publications and Other Works |
| Volume | 47 |
| Issue number | 7 |
| DOIs | |
| State | Published - Apr 29 2020 |
Keywords
- quantitative easing
- high yield bond rate
- price of oil
Disciplines
- Business