| Author Name | Willem THORBECKE (Senior Fellow, RIETI) |
|---|---|
| Creation Date/NO. | September 2024 24-E-071 |
| Research Project | Economic Shocks, the Japanese and World Economies, and Possible Policy Responses |
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Abstract
Oil prices are volatile. How do oil prices affect Taiwanese industries? This paper investigates how oil price increases driven by shocks to global aggregate demand and to oil supply affect Taiwanese sectoral stock returns. It uses Hamilton’s (2014) approach to divide oil price changes into portions driven by demand and supply factors. The results indicate that the semiconductor sector and Taiwan Semiconductor Manufacturing Company (TSMC) are harmed by oil price increases. Since oil prices are often high and quick to change, these findings imply that TSMC should expedite its goal of switching from depending on fossil fuels to utilizing renewable energy.
