The Role of China’s Demand in Global Oil Price Dynamics

Yihua Yu () and Wen Zhang

Emerging Markets Finance and Trade, 2019, vol. 55, issue 6, 1199-1215

Abstract: Using a time-varying parameter VAR model, this article documents the evolution in the responses of the global oil market and the Chinese economy to the identified oil supply shock and the China demand shock. The positive oil supply shock raises output while reduces inflation in China, but the effects are more ambiguous compared with the advanced economies. The counterfactual simulations point to an important role of the China demand shock in driving up the oil price during 2007–2008 and the postrecession recovery phase.

Date: 2019
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DOI: 10.1080/1540496X.2018.1445621

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