International Crude Oil Price Volatility And Its Impact On China’s Economic Growth

Crude oil is an important raw material in the development of the national economy:it plays a significant role in the development of the global economy. In recent years, especially after the financial crisis, affected by the global economic situation, supply and demand, political conflicts and other factors, the international crude oil prices soaring constantly, and suffer from more violent fluctuations. With the rapid development of China’s economy, the quantity of crude oil imports and consumption increased year after year. At the beginning of the century, the dependence on foreign oil is less than30%, but this number is up to56.4%in2012, more than half of our country’s crude oil demand is need imports to meet with. On this background, the fluctuation of the international crude oil price will have a disadvantageous impact on China’s economy inevitably. Therefore, analyze the relationship between crude oil price volatility and economic growth not only has important theoretical significance but also has practical significance.This paper introduces the skewed student t distribution, established a group of volatility models based on the skewed student t distribution: GARCH model, GJR-GARCH model,.FIGARCH model and FIAPARCH model, make use of them to analysis the return series of crude oil, and compare with those models based on the normal distribution, student t distribution and generalized differential distribution. The empirical results indicate that the FIAPARCH model based on the skewed student t distribution is superior to all other model, it can not only portray the leptokurtosis and fatter tail characteristics of the crude oil return series accurately, but also it can reveal the volatility clustter, asymmetry effects and long memory characteristics of crude oil. On this basis, conditional variance estimated by the FIAPARCH model based on the skewed student t distrubution is define as an indicator of international crude oil price volatility, and further analyze the impact of international crude oil price fluctuations on China’s economic growth. By analyzing the impact of international oil price fluctuations on China’s investment growth, consumption growth and export growth and then analyzes the impact of oil price volatility shocks on China’s economic growth. The empirical results show that the fluctuations of international oil prices has an adverse effect on China’s investment growth, consumption growth and export growth, and at last slowing the economic growth of China, but, and this negative effect will decline gradually as time goes on. Finally, this paper gives some policy recommendations on how to reduce the impacts of international oil price fluctuations on China’s economic growth.