Influence mechanism of debt ceiling uncertainty on crude oil market (IMAGE)
Caption
Debt ceiling uncertainty may affect crude oil market price through multiple channels simultaneously, e.g. enterprise production, investor sentiment (SENT), and government shutdown. More specifically, first, debt ceiling uncertainty will change the macro-economy environment and real business activities. Furthermore, the changes will affect the actual demand for crude oil in the future, which is finally reflected in the crude oil price (Guo et al., 2022b; Zhang et al., 2023b). Second, the increasing debt ceiling uncertainty will heighten investors’ concerns about the future economy. At the same time, their pessimistic sentiment toward expected oil demand can be easily reflected in crude oil price dynamics (Maghyereh et al., 2020; Wang et al., 2021b; Jiang et al., 2022). Finally, the differences in political positions and interest distributions between the two parties in the United States may make it difficult to reach an agreement on debt ceiling-related issues in a short time and may even lead to government shutdown. Once the government shuts down due to debt problems, the formulation and implementation of policies will be seriously hindered, and those announced projects relying on crude oil may be forced to suspend (Cappelli et al., 2023).
Credit
Kun Yang (Yunnan University of Finance and Economics, China) Xining Yang and Wenhua Yu (Chengdu University of Technology, China) Yu Wei (Yunnan University of Finance and Economics, China)
Usage Restrictions
This Original Content image is restricted for Non - Commercial Use Only and must include proper attribution to the creator.
License
Original content