Open AccessThe Influence of International Oil Price Fluctuations on Chinese Economy Based on VAR Model
Author(s) -
Qingzhi Lv
Publication year - 2019
Publication title -
iop conference series. earth and environmental science
Language(s) - English
Resource type - Journals
eISSN - 1755-1307
pISSN - 1755-1315
DOI - 10.1088/1755-1315/371/5/052007
Subject(s) - economics , oil price , granger causality , vector autoregression , money supply , monetary policy , price level , monetary economics , china , aggregate demand , macroeconomics , econometrics , political science , law
In this paper, the VAR model is used to construct the dynamic relationship between crude oil price and economic growth, price level and monetary policy. Granger causality analysis shows that oil price fluctuations are the Granger cause of economic growth rate, monetary policy and other economic indicators. Through VAR(2) model and impulse response analysis, the main impacts of oil price rise on China’s economy are: it will increase the economic growth rate in a short time; through the aggregate demand to pull and increase the cost of such two ways to increase the price level; it makes it more difficult to implement monetary policy effectively. On the whole, although the international oil price and China’s economic variables are complex and changeable, the economic system composed of international oil price, economic growth, price level and money supply is stable.