The Impact Of International Oil Price Fluctuation On China’s Price Level

In the contemporary,with the rapid economic development of various countries,the demand for petroleum,as a major energy source and an important chemical raw material,is also increasing year by year.As far as China is concerned,the current oil production of China cannot meet the needs of China’s economic development.The change of oil price will directly lead to the fluctuation of the production cost of related products in transportation,industry,agriculture and other industries,and gradually transfer the price of goods and services to the consumer market after the change,and finally cause the fluctuation of consumer price index,affecting the price level of a country.Therefore,under the background of China’s increasing dependence on oil imports and deepening participation in the international oil market,the impact of international oil price shock on China’s price level will be more and more significant.Firstly,this paper makes a detailed review of relevant literature,and analyzes the factors affecting the oil price,the status quo of the domestic oil market,the importance of oil in the national economy and the impact of oil price fluctuations on the price level.Considering the uncertainty of international oil price shock and the complex and changeable characteristics of real economic conditions,this paper establishes a vector autoregression model with time-varying parameters(TVP-VAR).The impact of international oil price fluctuation on the consumer price index of transportation and communication,food and clothing is empirically analyzed.In view of the possible asymmetric impact of international oil price shock on China’s price level,this paper further divides the oil price fluctuation into rising sequence and falling sequence,and finally replaces the proxy variable for robustness test.On this basis,corresponding conclusions are drawn and suggestions are put forward.Based on the empirical analysis of the impact of international oil price fluctuation on the changes of three types of consumer price index:Firstly,international oil price fluctuation has a significant impact on China’s consumer price index,and the effect of this impact has the characteristics of changing with time.Secondly,different types of consumer price index have different reaction intensity and direction to the impact of international oil price.Among them,transportation and communication consumer price index has the strongest reaction,while clothing consumer price index has a smaller reaction.Thirdly,oil price fluctuation has an asymmetric impact on the price level.On this basis,some policy suggestions are put forward,such as perfecting the diversification mechanism of petroleum import,accelerating the construction of petroleum strategic reserve system,perfecting the oil futures market,optimizing the energy consumption structure,optimizing the pricing mechanism of refined oil products and promoting the modernization of agriculture and animal husbandry.It provides some ideas for promoting the steady and sound development of China’s economy,actively responding to the impact of international oil price fluctuations and ensuring the stability of resident price level.