The Impact of Oil Price Fluctuations on Consumption, Output, and Investment in China’s Industrial Sectors

Zhao-Yong Sun, Xinyu Cai and Wei-Chiao Huang
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Xinyu Cai: School of Economics and Management, Xi’an University of Technology, Xi’an 710054, China
Wei-Chiao Huang: Department of Economics, Western Michigan University, Kalamazoo, MI 49008-5330, USA

Energies, 2022, vol. 15, issue 9, 1-19

Abstract: This paper aims to simulate and evaluate the impacts of increases and decreases in oil price on industrial sectors in China. We develop an oil-economy computable general equilibrium (OE-CGE) model with crude oil as an important factor in production. The transmission mechanism of crude oil price swings to various industrial sectors is described in the model. We calibrate parameters in the model parameters using input-output data. In addition, we simulate the rise and fall of oil prices in the model and assess the impact of crude oil prices on various industrial sectors. The results show that crude oil price changes have the greatest impact on the output and consumption of crude oil and gas extraction products sector, crude oil refined coke products, and processed nuclear fuel products sector. The investment of public utilities sector is the most sensitive to changes in crude oil price. When the price of crude oil changes, its investment drops significantly. Crude oil price stability is extremely important for investment and output stability in all sectors.

Keywords: crude oil price; industrial sectors; CGE model (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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