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The impact of rising international crude oil price on China's economy: an empirical analysis with CGE model

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Author Info

  • Ying Fan
  • Jian-Ling Jiao
  • Qiao-Mei Liang
  • Zhi-Yong Han
  • Yi-Ming Wei

Abstract

Many studies, as well as historical events, indicate that oil price shocks affect the macro economy of a country. In this paper we build a Chinese Computable General Equilibrium (CGE) model, with which we simulate the impact on the Chinese economy of international crude oil price when it rises by 5%, 10%, 20%, 40%, 50% and 100%. Simulation also identifies the effects of low/medium/high technological advances in the crude oil mining, petroleum and chemical and transportation sectors on fighting the risk of oil price shocks. The results indicate that international crude oil price has negative effects on Chinese real GDP, investment, consumption, import and export, amongst a range of economic indices. Technological advances have positive effects on fighting back the risk of oil price shocks, especially the technological advances in petroleum and chemicals, whilst the transportation sector has a greater effect on resisting oil price risk. An international oil price hike holds more disadvantages for rural residents' welfare. These results would be valuable reference information for policy makers.

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Bibliographic Info

Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Global Energy Issues.

Volume (Year): 27 (2007)
Issue (Month): 4 ()
Pages: 404-424

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Handle: RePEc:ids:ijgeni:v:27:y:2007:i:4:p:404-424

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Web page: http://www.inderscience.com/browse/index.php?journalID==13

Related research

Keywords: crude oil prices; CGE models; price risks; technological advances; China; economic impact; Chinese economy; computable general equilibrium model; simulation; oil price rises; risk management; rural areas.;

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Cited by:
  1. Cong, Rong-Gang & Wei, Yi-Ming & Jiao, Jian-Lin & Fan, Ying, 2008. "Relationships between oil price shocks and stock market: An empirical analysis from China," Energy Policy, Elsevier, vol. 36(9), pages 3544-3553, September.
  2. David C Broadstock & Hong Cao & Dayong Zhang, 2012. "Oil Shocks and their Impact on Energy Related Stocks in China," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 137, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  3. Zied Ftiti & Khaled Guesmi & Frédéric Teulon & Slim Chouachi, 2014. "Evolution of Crude Oil Prices and Economic Growth: The case of OPEC Countries," Working Papers 2014-421, Department of Research, Ipag Business School.
  4. Wensheng Kang & Ronald A. Ratti, 2014. "Policy Uncertainty in China, Oil Shocks and Stock Returns," CAMA Working Papers 2014-32, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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