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Full-Text Articles in Social and Behavioral Sciences
China’S Exports And The Oil Price, João Ricardo Faria, Andre V. Mollick, Pedro H. Albuquerque, Miguel A. Leon-Ledesma
China’S Exports And The Oil Price, João Ricardo Faria, Andre V. Mollick, Pedro H. Albuquerque, Miguel A. Leon-Ledesma
Economics and Finance Faculty Publications and Presentations
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 …