Author(s)

Yihong Li

Corresponding Author

Yihong Li

Abstract

Since the beginning of the 21st century, with the rapid development of the world economy, the demand for energy has become more and more vigorous. Oil has accounted for the highest proportion in the global energy structure. China has become the world's second-largest economy, whose the domestic oil supply relies heavily on international imports, but international oil price has been in frequent fluctuations. In this context, it is of great practical significance to analyze and study the impact of oil price fluctuations on China's economy. This paper not only reviews the history of oil price fluctuations, but also makes an economic theoretical analysis of the various factors that can cause oil price fluctuations. In this paper, the stationarity test method, co-integration analysis method and VAR model are comprehensively used to study the impact of crude oil price volatility on China's economic growth. The results show that the crude oil price and the GDP data series of China's economic growth are both first-order stationary time series. Second, in the long run, there is no long-term co-integration relationship between crude oil prices and China's economic growth, which is mainly because there are various factors affecting China's economic growth, as well as technology innovation and human capital factors. Finally, based on VAR model, this paper analyzes the short-term interaction between crude oil price and China's economic growth. The results show that crude oil price volatility has a significant short-term impact on China's economic growth, and it will weaken with time. Finally, this paper summarizes the conclusion of this study, and proposes that the government should accelerate the construction of China's oil strategic reserve system, and also actively promote China's crude oil futures market, and improve the pricing mechanism of China's crude oil price.

Keywords

Oil price fluctuation, Var model, Macroeconomy