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http://hdl.handle.net/10419/50610
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| Title: | | China's exports and the oil price  |
| Authors: | | Faria, João Ricardo Mollick, André Varella Albuquerque, Pedro H. León-Ledesma, Miguel A. |
| Issue Date: | | 2008 |
| Series/Report no.: | | School of Economics discussion papers 08,12 |
| Abstract: | | The increase in oil prices in recent years has occurred concurrently with a rapid expansion of Chinese exports in the world markets, despite China being an oil importing country. In this paper we develop a theoretical model that explains the positive correlation between Chinese exports and the oil price. The model shows that Chinese growth can lead to an increase in oil prices that has a stronger impact on its export competitors. This is due to the large labor force surplus of China. We then examine this hypothesis by estimating a reduced form equation for Chinese exports using Rodrik (2006)'s measure of export competitiveness, together with the oil price, productivity, real exchange rate, and foreign industrial production over the monthly 1992-2005 period. The results suggest a stable relationship and yields slightly positive values for the price of oil and elastic coefficients for export competitiveness, along with the expected negative elasticity for the real exchange rate. |
| Subjects: | | China oil prices competitiveness exports productivity |
| JEL: | | F14 F43 |
| Document Type: | | Working Paper |
| Appears in Collections: | | School of Economics Discussion Papers, University of Kent
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