Open AccessThe influence of oil price shocks on china’s macro-economy: A perspective of international trade
Author(s) -
Shiyi Chen,
Dengke Chen,
Wolfgang Karl Härdle
Publication year - 2015
Publication title -
journal of governance and regulation
Language(s) - English
Resource type - Journals
eISSN - 2306-6784
pISSN - 2220-9352
DOI - 10.22495/jgr_v4_i4_c1_p5
Subject(s) - economics , oil price , china , perspective (graphical) , macro , price level , price shock , relative price , monetary economics , international economics , political science , law , artificial intelligence , computer science , programming language
This paper is aimed at investigating and understanding the relationship between China’s macro-economy and oil price from a new perspective—the international trade perspective. We find strong evidence to suggest that the increase of China’s price level, resulting from oil price shocks, is statistically less than that of its main trade partners’. This helps us to understand the confused empirical results estimated within the SVAR framework. More specifically, SVAR results suggest that China’s output level is positively correlated with the oil price. Positive correlation between China’s output and oil price shocks presumably results from the drop in China’s relative price induced by oil price shocks, which is inclined to stimulate China’s goods and service exports.