The Effects Of Fluctuation Of Oil Prices For China Economic Growth

Oil is a kind of non-renewable and rare sources which relates to China sustainable economic growth and strategies. With the rapid development of China economy, the demand for oil increases sharply which activates the contradiction between demand and supply. Besides, oil price usually changes intensively and the oil industry belongs to the upper industry, the fluctuation of oil price would probably affect the economic growth. Under the background analyzed above, the thesis tries to find out the relations between oil price and economic growth through theoretical and empirical analysis. On one hand, the analysis can offer evidence for improving the mechanism of forming oil price and price adjusting policies. Besides, through analyzing the transmitting path, it can be found the key procedure to decrease the extent of impacts caused by the fluctuation of oil price so that China economy can grow healthy and rapidly.First of all, the author analyzes the effects of fluctuation of oil price for economic growth in the angle of history. The historic review includes important facts during the period from after the World War II to nowadays. It is found that oil price affects not only gross domestic products, but also inflation, investment, interest rate and employment rate as well. In fact, the fluctuation of oil price also changes people's living style, basic energy structure and even national strategies.Secondly, the author overviews related foreign papers since the first oil shock and summarizes a lot of national research in the field since 1980s. On this base, the thesisborrows a two-sector mixed economy model to analyze the effects of fluctuation oil price for economic growth theoretically. It is found that the reaction of gross domestic products is unclear and investment growth is not affected.So the thesis collects the gross domestic products, consumer price index, broad money supply, fixed asset investment, labor number and OPEC basic package price, uses Granger test to do empirical test. The results of test are listed as follows: the fluctuation rate of oil price has Granger consequence for the growth rate of gross domestic products with the lag of 5 quarters; the fluctuation rate of oil price has Granger consequence for consumer price index with the lag of 5 quarters; the fluctuation rate of oil price has Granger consequence for fixed asset investment with the lag of 3 quarters; the fluctuation rate of oil price has Granger consequence for broad money supply with the lag of 2 quarters; and the fluctuation rate of oil price does not has Granger consequence for the change of labor number. Therefore, it is inferred that in China, the fluctuation of oil price affects the economic growth through monetary policy and fixed asset investment.Furthermore, the thesis uses input-output method to analyze the impact of oil price for different sectors of China economy. The empirical result shows that oil processing industry, passenger transportation industry, electric power supply industry and goods transportation industry are the top four sectors in the impact.On the basis of above analysis, the author finally puts up with some related policy suggestions. It is believed that promoting market pricing of petroleum products, improving industry structure, strengthening building oil stock system and using monetary policy prudently are four main points.Last but not the least, the author also refers that some problems are still left for further research, for example, time series analysis can be used to compare the difference of the effects during different periods.