Modeling the impact of the COVID‐19 outbreak on environment, health sector and energy market

Abstract

The global outbreak of COVID‐19 disease had a significant impact on the entire globe. Such a notable public health event can be seen as a “black swan” that brings unpredictable and unusual forces into the economic context and that it could typically lead to a chain of adverse reactions and market disruptions. Hence, the purpose of this study is to examine how COVID‐19 affects the environment, health, and the oil and energy markets. To achieve this objective, we used daily data for several measures that refer to the environment, health, and oil and energy, for the first wave of the COVID‐19 pandemic (December 31, 2019–May 22, 2020). The variable integration mix led to the approach of the ARDL model, and the Granger causality test was also employed. These empirical techniques allowed us to examine the cointegration between variables and causal relationships. The econometric results of the ARDL models exhibited that the global new cases and new deaths of COVID‐19 have short and long‐term effects on the environment, the health sector, the oil, and energy measures. However, no significant causal connection was found between the pandemic and the environment, the health sector, or the oil and energy industry, according to the Granger causality test. The uniqueness of current approach consists in the investigation of pandemic impact on the health, environment, oil, and energy sector by applying the ARDL model that permits the analysis of cointegration both in the long run and in the short term. This study provides important insights for investors and policy makers.

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