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Oil supply news shock and Chinese economy

Dandan Liu, Qiaoyu Wang and Karen Yan

China Economic Review, 2022, vol. 73, issue C

Abstract: This paper studies the effects of the oil supply news shock on the Chinese economy using a novel approach as newly proposed in Känzig (2021). Specifically, we use the changes of West Texas Intermediate oil futures prices around OPEC meeting announcements as a high-frequency instrument in a structural VAR model to identify the oil supply news shock. Our results suggest that the Chinese domestic economy is not affected significantly by the shock in terms of industrial production and CPI, two important macroeconomic indicators. However, due to the global features of the international trade, China's exchange rate and trade balance respond to the shock.

Keywords: Oil supply news shock; Chinese economy; OPEC; VARs; High-frequency instrument (search for similar items in EconPapers)
JEL-codes: C32 E31 E32 Q43 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:73:y:2022:i:c:s1043951x22000542

DOI: 10.1016/j.chieco.2022.101796

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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