| ID | 092549 |
| Title Proper | Effect of oil price on China's exports |
| Language | ENG |
| Author | Faria, Joao Ricardo ; Mollick, Andre Varella ; Albuquerque, Pedro H ; Leon-Ledesma, Miguel A |
| Publication | 2009. |
| Summary / Abstract (Note) | The increase in oil prices in recent years has occurred concurrently with a rapid expansion of Chinese exports in the world markets, despite China being an oil importing country. In this paper we develop a theoretical model that explains the positive correlation between Chinese exports and the oil price. The model shows that Chinese growth can lead to an increase in oil prices that has a stronger impact on its export competitors. This is due to the large labor force surplus of China. We then examine this hypothesis by estimating a reduced form equation for Chinese exports using Rodrik [Rodrik, Dani, 2006. What's so special about China's exports? China and World Economy 14, 1-19.]'s measure of export competitiveness, together with the oil price, productivity, real exchange rate, and foreign industrial production over the monthly 1992-2005 period. The results suggest a stable relationship and yields slightly positive values for the price of oil and elastic coefficients for export competitiveness, along with the expected negative elasticity for the real exchange rate. |
| `In' analytical Note | China Economic Review Vol. 20, No. 4; Dec 2009: p.793-805 |
| Journal Source | China Economic Review Vol. 20, No. 4; Dec 2009: p.793-805 |
| Key Words | Oil Prices ; Competitiveness ; Exports ; Productivity ; ARDL Model |