Impact of Fluctuations in Financial Markets on Oil Prices and Iran's Economic Security
Volume 21, Issue 80, Summer 2018, Pages 101-134
Mohammad Jafari, Abbas Shakeri, Teimour Mohammadi
Abstract Using a vector autoregression model, this study aims to explore the impact of financial markets on crude oil prices and Iran's economic security. The results of analysis of variance indicate that financial transactions markets, particularly the Brent futures market, have the greatest impact on the physical crude oil market. In addition, the results of action-reaction functions suggest that shocks in financial markets have different impacts on crude oil prices, meaning a shock in the Brent futures market creates a positive shock to crude oil prices and a shock resulting from the dollar-price index produces a negative shock to oil prices. Due to the heavy reliance of the Iranian government's budget on oil revenues, fluctuations in financial markets lead to fluctuations in many of the country's economic indexes and negatively affect national security.