Do emerging markets matter in the world oil pricing system? Evidence of imported crude by China and India
This paper provides empirical evidence on the changing structure of world oil price system by identifying an additional driver-emerging market factor. We choose China and India as a representative of emerging markets to examine if the quantity of crude oil imported by China and India is significant...
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| Veröffentlicht in: | Energy policy 2011-08, Vol.39 (8), p.4624-4630 |
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| creator | Li, Hong Xiaowen Lin, Sharon |
| description | This paper provides empirical evidence on the changing structure of world oil price system by identifying an additional driver-emerging market factor. We choose China and India as a representative of emerging markets to examine if the quantity of crude oil imported by China and India is significant in the existing oil pricing system (
Kaufmann et al., 2004). Our data starts from January 2002 and ends in March 2010, which includes the oil shock of 2007–2008. We utilize cointegration and error correction model framework developed by
Engle–Granger (1987) and
Gregory–Hansen (1996) in the analysis. Our results indicate that demand from emerging markets has become a significant factor in the world oil pricing system since 2003. This result is significant as it lends empirical support to the widely held conjecture that the oil shock of 2007–2008 is a demand-led shock (
Hamilton, 2009). Our result also has significant policy implications that go beyond the oil shock. The emerging market factor is there to stay and reflects the changing power between emerging and developed economies in the world economic system as a result of decades of fast economic development in the former. It will certainly influence policy issues related to oil and beyond.
► We test the existing oil price modelling with data from 2002–2010. ► We find evidence of structural breaks in the world oil pricing model. ► We find that emerging market factor is a new driver in the world oil pricing system since 2003. ► The emerging market factor lends empirical support to “consumption-led” conjecture of oil shock. ► New factor reflects significant changes of oil demand landscape following shifting economic power. |
| doi_str_mv | 10.1016/j.enpol.2011.05.003 |
| format | Article |
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Kaufmann et al., 2004). Our data starts from January 2002 and ends in March 2010, which includes the oil shock of 2007–2008. We utilize cointegration and error correction model framework developed by
Engle–Granger (1987) and
Gregory–Hansen (1996) in the analysis. Our results indicate that demand from emerging markets has become a significant factor in the world oil pricing system since 2003. This result is significant as it lends empirical support to the widely held conjecture that the oil shock of 2007–2008 is a demand-led shock (
Hamilton, 2009). Our result also has significant policy implications that go beyond the oil shock. The emerging market factor is there to stay and reflects the changing power between emerging and developed economies in the world economic system as a result of decades of fast economic development in the former. It will certainly influence policy issues related to oil and beyond.
► We test the existing oil price modelling with data from 2002–2010. ► We find evidence of structural breaks in the world oil pricing model. ► We find that emerging market factor is a new driver in the world oil pricing system since 2003. ► The emerging market factor lends empirical support to “consumption-led” conjecture of oil shock. ► New factor reflects significant changes of oil demand landscape following shifting economic power.</description><identifier>ISSN: 0301-4215</identifier><identifier>EISSN: 1873-6777</identifier><identifier>DOI: 10.1016/j.enpol.2011.05.003</identifier><identifier>CODEN: ENPYAC</identifier><language>eng</language><publisher>Kidlington: Elsevier Ltd</publisher><subject>Applied sciences ; China ; China (People's Republic) ; Cointegration ; Cointegration Oil market modelling Oil imports by China and India ; Crude oil prices ; Demand ; Developing countries ; Economic data ; Economic development ; economic systems ; Economics ; Emerging markets ; Empirical analysis ; Empirical research ; Energy ; Energy economics ; Energy policy ; Exact sciences and technology ; Fossil fuels and derived products ; General, economic and professional studies ; India ; issues and policy ; Markets ; Mathematical models ; Methodology. Modelling ; Oil ; Oil imports by China and India ; Oil market modelling ; oils ; petroleum ; Petroleum industry ; Policies ; Policy making ; Prices ; Pricing ; Studies ; time series analysis</subject><ispartof>Energy policy, 2011-08, Vol.39 (8), p.4624-4630</ispartof><rights>2011</rights><rights>2014 INIST-CNRS</rights><rights>Copyright Elsevier Science Ltd. Aug 2011</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c691t-f89d03e73438f2036fefe0deceea184a7b8268fccc757cf5b3c0e4c2c2d20af13</citedby><cites>FETCH-LOGICAL-c691t-f89d03e73438f2036fefe0deceea184a7b8268fccc757cf5b3c0e4c2c2d20af13</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://www.sciencedirect.com/science/article/pii/S0301421511003752$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>314,776,780,3537,3994,27842,27843,27901,27902,65306</link.rule.ids><backlink>$$Uhttp://pascal-francis.inist.fr/vibad/index.php?action=getRecordDetail&idt=24306549$$DView record in Pascal Francis$$Hfree_for_read</backlink><backlink>$$Uhttp://econpapers.repec.org/article/eeeenepol/v_3a39_3ay_3a2011_3ai_3a8_3ap_3a4624-4630.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Li, Hong</creatorcontrib><creatorcontrib>Xiaowen Lin, Sharon</creatorcontrib><title>Do emerging markets matter in the world oil pricing system? Evidence of imported crude by China and India</title><title>Energy policy</title><description>This paper provides empirical evidence on the changing structure of world oil price system by identifying an additional driver-emerging market factor. We choose China and India as a representative of emerging markets to examine if the quantity of crude oil imported by China and India is significant in the existing oil pricing system (
Kaufmann et al., 2004). Our data starts from January 2002 and ends in March 2010, which includes the oil shock of 2007–2008. We utilize cointegration and error correction model framework developed by
Engle–Granger (1987) and
Gregory–Hansen (1996) in the analysis. Our results indicate that demand from emerging markets has become a significant factor in the world oil pricing system since 2003. This result is significant as it lends empirical support to the widely held conjecture that the oil shock of 2007–2008 is a demand-led shock (
Hamilton, 2009). Our result also has significant policy implications that go beyond the oil shock. The emerging market factor is there to stay and reflects the changing power between emerging and developed economies in the world economic system as a result of decades of fast economic development in the former. It will certainly influence policy issues related to oil and beyond.
► We test the existing oil price modelling with data from 2002–2010. ► We find evidence of structural breaks in the world oil pricing model. ► We find that emerging market factor is a new driver in the world oil pricing system since 2003. ► The emerging market factor lends empirical support to “consumption-led” conjecture of oil shock. ► New factor reflects significant changes of oil demand landscape following shifting economic power.</description><subject>Applied sciences</subject><subject>China</subject><subject>China (People's Republic)</subject><subject>Cointegration</subject><subject>Cointegration Oil market modelling Oil imports by China and India</subject><subject>Crude oil prices</subject><subject>Demand</subject><subject>Developing countries</subject><subject>Economic data</subject><subject>Economic development</subject><subject>economic systems</subject><subject>Economics</subject><subject>Emerging markets</subject><subject>Empirical analysis</subject><subject>Empirical research</subject><subject>Energy</subject><subject>Energy economics</subject><subject>Energy policy</subject><subject>Exact sciences and technology</subject><subject>Fossil fuels and derived products</subject><subject>General, economic and professional studies</subject><subject>India</subject><subject>issues and policy</subject><subject>Markets</subject><subject>Mathematical models</subject><subject>Methodology. Modelling</subject><subject>Oil</subject><subject>Oil imports by China and India</subject><subject>Oil market modelling</subject><subject>oils</subject><subject>petroleum</subject><subject>Petroleum industry</subject><subject>Policies</subject><subject>Policy making</subject><subject>Prices</subject><subject>Pricing</subject><subject>Studies</subject><subject>time series analysis</subject><issn>0301-4215</issn><issn>1873-6777</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2011</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><sourceid>7TQ</sourceid><recordid>eNqNksGO0zAQhiMEEmXhCThgISG4tIxjx4kPaIXKAitV4gB7tlxn3LokcbHTor49k-1qDxwWLI3n8s3v8fxTFC85LDhw9X63wGEfu0UJnC-gWgCIR8WMN7WYq7quHxczEMDnsuTV0-JZzjsAkI2WsyJ8igx7TJswbFhv008cM-VxxMTCwMYtst8xdS2LoWP7FNzE5VMesb9kV8fQ4uCQRc9Cv49pxJa5dGiRrU9suQ2DZXZo2fXQBvu8eOJtl_HFXb4obj5f_Vh-na--fbleflzNndJ8nPtGtyCwFlI0vgShPHqEFh2i5Y209bopVeOdc3VVO1-thQOUrnRlW4L1XFwUb8-6-xR_HTCPpg_ZYdfZAeMhG821rrQQ_0M2oECX8p9kU0vqjTeKyHcPkpzs4KAVn0Rf_4Xu4iENNBvSU9OzWhMkzpBLMeeE3pAJ5NPJcDCT92Znbr03k_cGKkPeU9XqXJVwj-6-BOkMOMFHI6zQdJ0obiuFDRQNxZ5CqlIaqQSY7diT3Ju7Tm12tvPJDi7ke1nqFFQlp2ZfnTlvo7GbRMzNd1JXtG41L-tp5B_OBNIGHAMmk12YVqgNCd1o2hge_Ngfi2jnYg</recordid><startdate>20110801</startdate><enddate>20110801</enddate><creator>Li, Hong</creator><creator>Xiaowen Lin, Sharon</creator><general>Elsevier Ltd</general><general>Elsevier</general><general>Elsevier Science Ltd</general><scope>FBQ</scope><scope>IQODW</scope><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7SP</scope><scope>7TA</scope><scope>7TB</scope><scope>7TQ</scope><scope>8BJ</scope><scope>8FD</scope><scope>DHY</scope><scope>DON</scope><scope>F28</scope><scope>FQK</scope><scope>FR3</scope><scope>H8D</scope><scope>JBE</scope><scope>JG9</scope><scope>KR7</scope><scope>L7M</scope><scope>7SU</scope><scope>C1K</scope><scope>7ST</scope><scope>SOI</scope></search><sort><creationdate>20110801</creationdate><title>Do emerging markets matter in the world oil pricing system? Evidence of imported crude by China and India</title><author>Li, Hong ; Xiaowen Lin, Sharon</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c691t-f89d03e73438f2036fefe0deceea184a7b8268fccc757cf5b3c0e4c2c2d20af13</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2011</creationdate><topic>Applied sciences</topic><topic>China</topic><topic>China (People's Republic)</topic><topic>Cointegration</topic><topic>Cointegration Oil market modelling Oil imports by China and India</topic><topic>Crude oil prices</topic><topic>Demand</topic><topic>Developing countries</topic><topic>Economic data</topic><topic>Economic development</topic><topic>economic systems</topic><topic>Economics</topic><topic>Emerging markets</topic><topic>Empirical analysis</topic><topic>Empirical research</topic><topic>Energy</topic><topic>Energy economics</topic><topic>Energy policy</topic><topic>Exact sciences and technology</topic><topic>Fossil fuels and derived products</topic><topic>General, economic and professional studies</topic><topic>India</topic><topic>issues and policy</topic><topic>Markets</topic><topic>Mathematical models</topic><topic>Methodology. Modelling</topic><topic>Oil</topic><topic>Oil imports by China and India</topic><topic>Oil market modelling</topic><topic>oils</topic><topic>petroleum</topic><topic>Petroleum industry</topic><topic>Policies</topic><topic>Policy making</topic><topic>Prices</topic><topic>Pricing</topic><topic>Studies</topic><topic>time series analysis</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Li, Hong</creatorcontrib><creatorcontrib>Xiaowen Lin, Sharon</creatorcontrib><collection>AGRIS</collection><collection>Pascal-Francis</collection><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>Electronics & Communications Abstracts</collection><collection>Materials Business File</collection><collection>Mechanical & Transportation Engineering Abstracts</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>Technology Research Database</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>ANTE: Abstracts in New Technology & Engineering</collection><collection>International Bibliography of the Social Sciences</collection><collection>Engineering Research Database</collection><collection>Aerospace Database</collection><collection>International Bibliography of the Social Sciences</collection><collection>Materials Research Database</collection><collection>Civil Engineering Abstracts</collection><collection>Advanced Technologies Database with Aerospace</collection><collection>Environmental Engineering Abstracts</collection><collection>Environmental Sciences and Pollution Management</collection><collection>Environment Abstracts</collection><collection>Environment Abstracts</collection><jtitle>Energy policy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Li, Hong</au><au>Xiaowen Lin, Sharon</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Do emerging markets matter in the world oil pricing system? Evidence of imported crude by China and India</atitle><jtitle>Energy policy</jtitle><date>2011-08-01</date><risdate>2011</risdate><volume>39</volume><issue>8</issue><spage>4624</spage><epage>4630</epage><pages>4624-4630</pages><issn>0301-4215</issn><eissn>1873-6777</eissn><coden>ENPYAC</coden><abstract>This paper provides empirical evidence on the changing structure of world oil price system by identifying an additional driver-emerging market factor. We choose China and India as a representative of emerging markets to examine if the quantity of crude oil imported by China and India is significant in the existing oil pricing system (
Kaufmann et al., 2004). Our data starts from January 2002 and ends in March 2010, which includes the oil shock of 2007–2008. We utilize cointegration and error correction model framework developed by
Engle–Granger (1987) and
Gregory–Hansen (1996) in the analysis. Our results indicate that demand from emerging markets has become a significant factor in the world oil pricing system since 2003. This result is significant as it lends empirical support to the widely held conjecture that the oil shock of 2007–2008 is a demand-led shock (
Hamilton, 2009). Our result also has significant policy implications that go beyond the oil shock. The emerging market factor is there to stay and reflects the changing power between emerging and developed economies in the world economic system as a result of decades of fast economic development in the former. It will certainly influence policy issues related to oil and beyond.
► We test the existing oil price modelling with data from 2002–2010. ► We find evidence of structural breaks in the world oil pricing model. ► We find that emerging market factor is a new driver in the world oil pricing system since 2003. ► The emerging market factor lends empirical support to “consumption-led” conjecture of oil shock. ► New factor reflects significant changes of oil demand landscape following shifting economic power.</abstract><cop>Kidlington</cop><pub>Elsevier Ltd</pub><doi>10.1016/j.enpol.2011.05.003</doi><tpages>7</tpages><oa>free_for_read</oa></addata></record> |
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| ispartof | Energy policy, 2011-08, Vol.39 (8), p.4624-4630 |
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| source | RePEc; PAIS Index; Elsevier ScienceDirect Journals |
| subjects | Applied sciences China China (People's Republic) Cointegration Cointegration Oil market modelling Oil imports by China and India Crude oil prices Demand Developing countries Economic data Economic development economic systems Economics Emerging markets Empirical analysis Empirical research Energy Energy economics Energy policy Exact sciences and technology Fossil fuels and derived products General, economic and professional studies India issues and policy Markets Mathematical models Methodology. Modelling Oil Oil imports by China and India Oil market modelling oils petroleum Petroleum industry Policies Policy making Prices Pricing Studies time series analysis |
| title | Do emerging markets matter in the world oil pricing system? Evidence of imported crude by China and India |
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