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The Impact of China's Economic Growth on Crude Oil Price: Evidence from Structural VAR

Author

Listed:
  • Ahmed Hamendi
  • Siong Hook Law

    (University Putra Malaysia)

Abstract

"This paper examines the impact of Chinese economic growth on the real price of crude oil based on monthly time series data from 1992:01 to 2017:06 using structural vector auto-regression (SVAR). The variables of the SVAR model are global crude oil production, index of global economic activity, China’s real GDP and real price of crude oil. Due to a break in the real price of oil series during the 2008 global financial crisis, the data is divided into two intervals. The results for the period prior to the 2008 crisis show that global demand shocks had a significant impact, while shocks from Chinese economic activity and global oil supply were insignificant. However, the results for the post 2008 period demonstrate that demand shocks of the Chinese economy have a significant but delayed impact, while global supply shocks have an immediate impact. The findings indicate a new regime after the 2008 crisis with a resurgence of a supply driven crude oil market structure that is influenced by Chinese economic performance."

Suggested Citation

  • Ahmed Hamendi & Siong Hook Law, 2023. "The Impact of China's Economic Growth on Crude Oil Price: Evidence from Structural VAR," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 15(3), pages 237-252, December.
    • Handle: RePEc:ren:journl:v:15:y:2023:i:3:p:237-252
    DOI: https://doi.org/10.15353/rea.v15i3-4.4069
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    More about this item

    Keywords

    crude oil market; China; SVAR;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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