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Estimating the impact of China's export policy on tin prices: a mode decomposition counterfactual analysis method

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  • Zhu, Yongguang
  • Xu, Deyi
  • Cheng, Jinhua
  • Ali, Saleem Hassan

Abstract

China is an important country for the storage, import, production and consumption of tin ore and is an exporter of refined tin. Since 2002, China has engaged in the export quota management of both tin and tin products. In January 2017, the Chinese government officially abolished quotas and tariffs for the export of refined tin. In this paper, we propose mode decomposition counterfactual analysis method, which is composed of the mode decomposition extreme event analysis and a counterfactual analysis, to estimate the resulting policy effects. We also use this method to estimate the effects of China's export policy on tin price. In empirical research, we compare three kinds of mode decomposition methods, and finally select empirical mode decomposition. Finally, we chose EMD results. The main conclusions are as follows. First, China's market has comparative advantage on tin trade, the change of China's export policy will not affect the SHFE tin price. Second, cancellation of China's export policy results in an increase in the supply of international tin market, so LME tin prices has a downward trend in the long run. Third, change of China's policies exacerbated the investors' concerns about the uncertainty of tin market, resulting in the short-term fluctuation of LME tin prices. Fourth, market feedback is lagging behind policy, and price is an effective indicator of feedback policy. Finally, we discuss directions for future research.

Suggested Citation

  • Zhu, Yongguang & Xu, Deyi & Cheng, Jinhua & Ali, Saleem Hassan, 2018. "Estimating the impact of China's export policy on tin prices: a mode decomposition counterfactual analysis method," Resources Policy, Elsevier, vol. 59(C), pages 250-264.
  • Handle: RePEc:eee:jrpoli:v:59:y:2018:i:c:p:250-264
    DOI: 10.1016/j.resourpol.2018.07.012
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