On The Asymmetry Effect Of Oil Price Shock To Chinese Fixed Investment

The importance of oil in the economy determines the study value of its price mechanism,it has been a long time since Chinese and foreign scholars paid attention to the study of the macroeconomic impact of oil price shocks.different economic indicators were used to explore the transmission mechanism of oil price shock in economy,through studying the relationship between price of oil and these economic variables,we can know the influence of oil price to the economy.considering the importance of oil in maintaining production activities and development process to companies,we selected a variable that could reflect the behavior of firms-investment in fixed assets.Firstly,we checked the asymmetry between oil price shock and the non-residential fixed investment by setting up a VAR model,then we analyzed the impulse response based on the asymmetric findings,aiming to explore the specific response of various investment to oil price shocks.Meanwhile,VAR variance decomposition helped us explained the contribution of oil price shocks to different kinds of investments,this made it possible to quantify the extent of oil price shocks.we selected 18 investment variables including total non-residential fixed investment and 17 Categories of other investments.We set up 18 VAR models with each kind of investment respectively,there were only five categories of investment response significantly to the oil price shock,and all only happened when oil prices drop,we proved asymmetry between the fixed investment and oil shock based on the impulse response,then we combined these remarkable impulse responses with variance decomposition analysis,found that investment in different categories have different reactions when oil prices dropped,and most of the fixed investment only show an upward trend when oil price dropped,few investments show a downward trend after the upward trend.The largest reaction happen in transport electricity investment,followed by Electricity,heat and water supply industry and the residents service,repair industry,the reaction of manufacturing industry to the oil price shock is minimized.As China is in the process of energy structure adjustment,the government should take into account the reactions of business investment when making policy about oil price,while the response of some industries to the oil price shocks is relatively strong because of high dependence,Therefore,improving energy efficiency,looking for new and alternative resources will be effective means to reduce oil price sensitivity.Especially in the case of dwindling energy storage,urgent reform.There are totally five parts in this paper,the first part is introduction,including the background and significance of this study.The second part makes a review and evaluation about the existing research.The third part introduces the model used in this paper,and then establish VAR model after the processing of related data which is used to test the asymmetry between oil price shock and non-residential fixed investment.through the impulse response of VAR model.By using the bivariate VAR model,the oil price is divided into two sequences according to the positive and negative growth rates.At last we will explore the specific transmission mechanism of the oil price shocks to the investment based on the impulse response of VAR model and quantifying the impact of oil price shocks to all types of investment through the asymmetry test and the variance decomposition,gaining a more comprehensive understanding of the impact of the transmission mechanism according to the different contribution of oil price shock to different kinds of investment and thus.The fifth part make a summary about the full text and then puts forward some policy suggestions accordingly.