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Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China

Year 2021, , 271 - 280, 28.01.2021
https://doi.org/10.51290/dpusbe.835558

Abstract

Examining the relation between oil price changes and the trade balance is important for oil-importing countries to formulate policy solutions. This study contributes to the literature by examining the asymmetric effects of changes in oil prices on the trade balance of China, the world’s largest crude oil importer. To this end, the Nonlinear Autoregressive Distributed Lag (NARDL) cointegration approach and Pesaran’s Generalized Variance Decompositions technique are adopted. The results reveal that the trade balance responds asymmetrically to oil price changes in the long run, while the responses are symmetric in the short run. The Generalized Variance Decompositions results indicate that the trade balance is more sensitive to the oil price increases than to decreases. These results indicate that China should support energy-efficient systems to reduce its dependency on imported oil.

References

  • Ballı, E., Atık, A. N., & Nugent, J. B. (2020). Time-varying impact of oil shocks on trade balances: evidence using the TVP-VAR model. Energy, 119377. https://doi.org/10.1016/j.energy.2020.119377
  • Chuku, A., Usenobong, A., Ndifreke, R., & Ekpeno, L. (2011). Oil price shocks and the dynamics of the current account balances in Nigeria. OPEC Energy Review, 35 (2), 119–139. https://doi.org/10.1111/j.1753-0237.2011.00186.x
  • Gruber J. W., & Kamin, S. B. (2007). Explaining the global pattern of current account imbalances. J. Int. Money Finance, 26, 500–522. https://doi.org/10.1016/j.jimonfin.2007.03.003
  • International Energy Agency, 2020a. (2020, 9th December) Retrieved from https://www.eia.gov/tools/faqs/faq.php?id=709&t=6
  • International Energy Agency, 2020b. (2020, 9th December) Retrieved from https://www.eia.gov/todayinenergy/detail.php? id=43216#:~:text=China%20remains%20the%20world's%20top,crude%20oil%20imports%20in%202019
  • Killian L., Repucci A., & Spatafora, N. (2009). Oil shocks and external balances. J. Int. Econ, 77, 181–194. https://doi.org/10.1016/j.jinteco.2009.01.001
  • Özlale U., Pekkurnaz D. (2010). Oil prices and current account: A structural analysis for the Turkish economy. Energy Policy, 38, 4489–4496. https://doi.org/10.1016/j.enpol.2010.03.082
  • Pesaran, M. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics Letters, 58, 17-29. https://doi.org/10.1016/S0165-1765(97)00214-0
  • Pesaran, M. H., Shin, Y., & Smit, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616
  • Schubert, S. F. (2014). Dynamic effects of oil price shocks and their impact on the current account. Macroecon Dyn, 18, 316–337. https://doi.org/10.1017/S1365100512000405
  • Shin, Y, Yu, B, & Greenwood-Nimmo, M. (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In W. Horrace & R. Sickles (Eds.), The Festschrift in Honor of Peter Schmidt.: Econometric Methods and Applications (pp. 281-314). New York: Springer. https://doi.org/10.1007/978-1-4899-8008-3__9
  • O’Sullivan, S. (2019). China: Growing import volumes of LNG highlight China’s rising energy import dependency. Oxford Institute for Energy Studies. Retrieved from https://www.oxfordenergy.org/wpcms/wp-content/uploads/2019/06/China-growing-import-volumes-of-LNG-highlight-China%E2%80%99s-rising-energy-import-dependency.pdf
  • Yalta, A. Y., & Yalta, A. T. (2017). Dependency on imported oil and its effects on current account. Energy Sources, Part B: Economics, Planning, and Policy, 12(10), 859-867. https://doi.org/10.1080/15567249.2017.1315753
  • Zaouali, S. 2007. Impact of higher oil prices on the Chinese economy. OPEC Rev., 31, 191–214. https://doi.org/10.1111/j.1468-0076.2007.00183.x

Ticaret Dengesinin Petrol Fiyatlarındaki Değişikliklere Asimetrik Tepkisi: Çin Örneği

Year 2021, , 271 - 280, 28.01.2021
https://doi.org/10.51290/dpusbe.835558

Abstract

Petrol fiyatlarındaki değişiklikler ile ticaret dengesi arasındaki ilişkinin incelenmesi, petrol ithal eden ülkelerde uygulanacak politikaların belirlenmesinde oldukça önemlidir. Bu çalışma, petrol fiyatlarındaki değişimlerin dünyanın en büyük ham petrol ithalatçısı olan Çin'in ticaret dengesi üzerindeki asimetrik etkilerini inceleyerek literatüre katkı sağlamaktadır. Bu amaçla, çalışmada Doğrusal Olmayan Dağıtılmış Gecikmeli Otoregresif (NARDL) eşbütünleşme yaklaşımı uygulanmaktadır. Elde edilen bulgular, uzun dönemde petrol fiyatı değişikliklerine karşı ticaret dengesinin asimetrik olarak tepki verdiğini, kısa dönemde ise tepkilerin simetrik olduğunu ortaya koymaktadır. Bu sonuçlar, Çin'in ithal petrole bağımlılığını azaltmak için enerji-etkin sistemleri desteklemesi gerektiğini göstermektedir.

References

  • Ballı, E., Atık, A. N., & Nugent, J. B. (2020). Time-varying impact of oil shocks on trade balances: evidence using the TVP-VAR model. Energy, 119377. https://doi.org/10.1016/j.energy.2020.119377
  • Chuku, A., Usenobong, A., Ndifreke, R., & Ekpeno, L. (2011). Oil price shocks and the dynamics of the current account balances in Nigeria. OPEC Energy Review, 35 (2), 119–139. https://doi.org/10.1111/j.1753-0237.2011.00186.x
  • Gruber J. W., & Kamin, S. B. (2007). Explaining the global pattern of current account imbalances. J. Int. Money Finance, 26, 500–522. https://doi.org/10.1016/j.jimonfin.2007.03.003
  • International Energy Agency, 2020a. (2020, 9th December) Retrieved from https://www.eia.gov/tools/faqs/faq.php?id=709&t=6
  • International Energy Agency, 2020b. (2020, 9th December) Retrieved from https://www.eia.gov/todayinenergy/detail.php? id=43216#:~:text=China%20remains%20the%20world's%20top,crude%20oil%20imports%20in%202019
  • Killian L., Repucci A., & Spatafora, N. (2009). Oil shocks and external balances. J. Int. Econ, 77, 181–194. https://doi.org/10.1016/j.jinteco.2009.01.001
  • Özlale U., Pekkurnaz D. (2010). Oil prices and current account: A structural analysis for the Turkish economy. Energy Policy, 38, 4489–4496. https://doi.org/10.1016/j.enpol.2010.03.082
  • Pesaran, M. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics Letters, 58, 17-29. https://doi.org/10.1016/S0165-1765(97)00214-0
  • Pesaran, M. H., Shin, Y., & Smit, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616
  • Schubert, S. F. (2014). Dynamic effects of oil price shocks and their impact on the current account. Macroecon Dyn, 18, 316–337. https://doi.org/10.1017/S1365100512000405
  • Shin, Y, Yu, B, & Greenwood-Nimmo, M. (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In W. Horrace & R. Sickles (Eds.), The Festschrift in Honor of Peter Schmidt.: Econometric Methods and Applications (pp. 281-314). New York: Springer. https://doi.org/10.1007/978-1-4899-8008-3__9
  • O’Sullivan, S. (2019). China: Growing import volumes of LNG highlight China’s rising energy import dependency. Oxford Institute for Energy Studies. Retrieved from https://www.oxfordenergy.org/wpcms/wp-content/uploads/2019/06/China-growing-import-volumes-of-LNG-highlight-China%E2%80%99s-rising-energy-import-dependency.pdf
  • Yalta, A. Y., & Yalta, A. T. (2017). Dependency on imported oil and its effects on current account. Energy Sources, Part B: Economics, Planning, and Policy, 12(10), 859-867. https://doi.org/10.1080/15567249.2017.1315753
  • Zaouali, S. 2007. Impact of higher oil prices on the Chinese economy. OPEC Rev., 31, 191–214. https://doi.org/10.1111/j.1468-0076.2007.00183.x
There are 14 citations in total.

Details

Primary Language English
Journal Section RESEARCH ARTICLES
Authors

Ayşen Sivrikaya 0000-0003-2199-3593

Publication Date January 28, 2021
Published in Issue Year 2021

Cite

APA Sivrikaya, A. (2021). Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi(67), 271-280. https://doi.org/10.51290/dpusbe.835558
AMA Sivrikaya A. Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi. January 2021;(67):271-280. doi:10.51290/dpusbe.835558
Chicago Sivrikaya, Ayşen. “Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China”. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, no. 67 (January 2021): 271-80. https://doi.org/10.51290/dpusbe.835558.
EndNote Sivrikaya A (January 1, 2021) Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi 67 271–280.
IEEE A. Sivrikaya, “Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China”, Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, no. 67, pp. 271–280, January 2021, doi: 10.51290/dpusbe.835558.
ISNAD Sivrikaya, Ayşen. “Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China”. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi 67 (January 2021), 271-280. https://doi.org/10.51290/dpusbe.835558.
JAMA Sivrikaya A. Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi. 2021;:271–280.
MLA Sivrikaya, Ayşen. “Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China”. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, no. 67, 2021, pp. 271-80, doi:10.51290/dpusbe.835558.
Vancouver Sivrikaya A. Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi. 2021(67):271-80.

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