Studies On The Relationship Between The Rate Of Oil Consume Growth And The Rate Of Economic Growth In China

Oil consume growth and economic growth are two very important macroeconomic phenomenon. The rate of oil consume growth is the key indicator of the stability of overall macroeconomic of a country, and the rate of economic growth often reflects the economic strength of a country. Since the beginning of reform and opening up, China's economy has maintained a rapid growth,the economy increase leads to the volum of oil demand enlarge gradually ,result in our country oil supplies with the course having experienced from autarky to being dependent on entrance..Although the foreign economists have done some research on the relationship between the oil consume and economic growth, they didn't place the study on the rate of oil consume growth and the rate of economic growth. The paper tries to study the relationship between the rate of oil consume growth and the rate of economic growth by using several methods of econometrics and puts the emphasis on the study of the empirical test of the relationship between the fluctuations of them. The structure of the paper is as follows: in the first part of the paper, weintroduce the theories on the relationship between the rate of oil consume growth and the rate of economic growth, which is the theoretical foundation of the paper. In the second part of the paper, we introduce the models and approaches which we can use to measure and test the relationship between the two variables. In the third part of the paper, we test the relationship between the rate of oil consume growth and the rate of economic growth in our country by using the models and methods mentioned above. In the end, we draw the conclusion and give our economic suggestions.In the chapter 1 of the paper, we systematically introduced the theoretical studies on the relationship between oil(enengy) consume and the rate of economic growth by the economists from western countries. We give our introduction from three different points of views, that is, the rate of oil consume growth and the rate of economic growth have Granger causality each other, the rate of oil consume growth and the rate of economic growth have unidirectional Granger causality or they have no Granger causality at all. This chapter is the foundation of the paper.In the chapter 2 of the paper, we introduced some important time series analysis models and methods by which we can measure and test the relationship between the rate of oil consume growth and the rate of economic growth. In the first section of the chapter, we introduced the testing methods by which to differentiate stationary series and unit root test, i.e, ADF testing method and PP testing method. Then, we introduced the co-integration theory and Error Correction Model. The co-integration testing is used to determine the long-run equilibrium relationship between two or more variables. ECM is one type of the VAR model which is on the foundation of the co-integration group. By evaluating the co-integration group, we can get the ECM as follows:if|α|> 1, then the fluctuation in the short term will get close to the balance in the long run. In the section 3, we introduced the Granger casuality testing to determine the casual relationship between the two series. Although the Granger testing casuality can not give us the information of which one determines the other, but it also tells us the level of explanation between the two variables. In the last section of this chapter, we introduced the Autoregressive Conditional Heteroscedasticity Model: ARCH model and GARCH model, which describe the variance of the dependant variables. ARCH model is a particular form of the GARCH model. GARCH model is made up of a mean equation and a variance equation. The mean equation is as follows:This equation is used to describe the data producing process. And the conditional variance equation is:By using the past realized volatility information and the already modified information, the conditional variance in GARCH model can describe the data producing process with both stationary and volatile property.In the chapter 3, we test the relationship between the rate of oil consume growth and the rate of the economic growth in our country by using the models and methods introduced in the chapter 2. This chapter is the most important part of the paper. At first, we draw a negative relationship between the rate of oil consume growth and the rate of economic growth in long term but a positive relationship between them in one year by calculating the correlation coefficient of the two variables. But the result of the calculation is too simple. Then we use co-integration test and ECM to further our study on the relationship between the two variables. Before carring the test, we have to use the unit root test to make sure that the time series are stationary time series. Then we find that the two time series are single integration process. Then we use Johansen test and ECM to test .The conclution of Johansen test is, a negative relationship between the rate of oil consume growth and the rate of economic growth in long term , we find that"the oil consume growth rapidly will hinder economy high speed growth, economy high speed growth can reduce oil consume speed in long term"but ECM tell us that economy high speed growth can not reduce oil consume speed.Then,we use Granger casuality testing method to test the relationship between the level of the two variables and the trend and the fluctuation of the two variables. Before the test , we use H-P filer to decompose the trend and cycle component of the two variables. Then we find that the rate of the oil consume growth has a negative effect on the rate of economic growth, and the rate of economic growth also has an negative effect on the trend component of the rate of the oil consume growth. The finding is so important that it means that the oil consume growth rapidly will hinder economy high speed growth, economy high speed growth can reduce oil consume speed in long termAt last, we use VAR model to test the relationship between the cycle component of the rate of oil consume growth and the one of the rate of economic growth. By using ARCH and GARCH model, we confirm that there is Autoregressive Conditional Heteroscedasticity phenomemon in the series of the rate of oil consume growth and the rate of economic growth. Then we use Impulse response function to test the relationship between the two variables. We find that the shock on the oil consume growth has a positive effect on itself, but the rate of economic growth doesn't respond actively to the shock on the cycle component of the rate of oil consume growth. At the same time, the shock on the rate of economic growth have persist effect on itself, that is why the the cycle of the economy in our country appears stable. Furthermore, the rate of economic growth respond more actively to the rate of oil consum growth shock, so the conclusion reflects that they have unidrectional relation in shock effectIn the last chapter of the paper, we give the results of our studies and the explanation of a negative relationship between the rate of oil consume growth and the rate of economic growth in long term but a positive relationship between them in one year. At last, we give our economic suggestions...