Price causal relations between China and the world oil markets
This paper examines China's influence on the volatility of crude oil prices in the international markets. Using data from 1997-2007, we find that China has little impact on the volatility of the world crude oil markets. On the contrary, our evidence shows that the crude oil price innovations in China are significantly driven by the OPEC and US markets, which account for 42-59% of the oil price variations in total. Our results indicate that although China emerges to be an important player, it has not yet correspondingly become an oil pricing power in the world oil markets.
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