Effects of Commodity Price Movements on China’s Macroeconomy

DOI: https://doi.org/10.62517/jel.202514408

Author(s)

Xin He1, Sihan Yu2, Ting Ye3,*

Affiliation(s)

1Nanyang Technological University, Singapore 2Central South University of Forestry and Technology, Changsha, Hunan, China 3Research administration, Shanghai Normal University, Shanghai, China *Corresponding Author

Abstract

As indispensable basic resources in macroeconomic development, commodity price fluctuations continually affect national economic performance. Following the global COVID-19 outbreak in 2019, China’s and international commodity prices plunged and then fluctuated sharply in the post-pandemic era. This paper employs monthly indices of bulk commodities (energy, non-ferrous metals, minerals, oil and fats, agricultural products) and key macro-indicators (CPI, PPI, M2, benchmark interest rate) from June 2006 to December 2021, constructs a five-variable Structural VAR model, and conducts impulse-response and variance-decomposition analyses. Results indicate that in the short term, commodity price shocks exert a significant positive effect on CPI, PPI and interest rates, while negatively impacting money supply; the magnitude and persistence differ markedly across commodity categories. Strategy recommendations are proposed to strengthen price-monitoring mechanisms, improve medium stabilization systems, and improving the discourse power of international commodity pricing.

Keywords

Commodities; Price Fluctuation; Macroeconomics; Inflation; SVAR Model

References

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