Energy price, regulatory price distortion and economic growth: A case study of China

Shi, X; Sun, S

Energy price, regulatory price distortion and economic growth: A case study of China

Shi, X

Sun, S

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Publication Type:: Journal Article
Citation:: Energy Economics, 2017, 63 pp. 261 - 271
Issue Date:: 2017-03-01

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Field	Value	Language
dc.contributor.author	Shi, X https://orcid.org/0000-0001-9653-7395	en_US
dc.contributor.author	Sun, S	en_US
dc.date.available	2020-05-25T19:26:59Z
dc.date.issued	2017-03-01	en_US
dc.identifier.citation	Energy Economics, 2017, 63 pp. 261 - 271	en_US
dc.identifier.issn	0140-9883	en_US
dc.identifier.uri	http://hdl.handle.net/10453/124308
dc.description.abstract	© 2017 Elsevier B.V. Energy prices are often distorted by government control, which is justified on the grounds that such control will help mitigate the negative impact of price volatility from oil imports, and thus positively affect the domestic economy. In this paper, we show in a two-sector growth model, that regulatory price distortion can negatively affect the economy, and then, based on the model, we empirically estimate the impact of the price distortion on output growth in China, using monthly, time series data from 2005M1 to 2012M12. In contrast to the usual argument for regulatory control to mitigate price volatility, we find that regulatory price distortion negatively affects output growth in China during both the short and long term, because it is robust to different measures of output and price distortion. Hence, the argument that using price regulation to protect economic growth is undermined, and subsequently, this study lends its support to energy price deregulation. A market oriented energy price regime may improve the resilience of the domestic economy to global oil price shocks.	en_US
dc.relation.ispartof	Energy Economics	en_US
dc.relation.isbasedon	10.1016/j.eneco.2017.02.006	en_US
dc.rights	info:eu-repo/semantics/openAccess
dc.subject.classification	Energy	en_US
dc.title	Energy price, regulatory price distortion and economic growth: A case study of China	en_US
dc.type	Journal Article
utslib.citation.volume	63	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	0913 Mechanical Engineering	en_US
utslib.for	0906 Electrical and Electronic Engineering	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/DVC (International)
pubs.organisational-group	/University of Technology Sydney/DVC (International)/Australia-China Relations Institute
utslib.copyright.status	open_access	*
pubs.publication-status	Published	en_US
pubs.volume	63	en_US

Abstract:

© 2017 Elsevier B.V. Energy prices are often distorted by government control, which is justified on the grounds that such control will help mitigate the negative impact of price volatility from oil imports, and thus positively affect the domestic economy. In this paper, we show in a two-sector growth model, that regulatory price distortion can negatively affect the economy, and then, based on the model, we empirically estimate the impact of the price distortion on output growth in China, using monthly, time series data from 2005M1 to 2012M12. In contrast to the usual argument for regulatory control to mitigate price volatility, we find that regulatory price distortion negatively affects output growth in China during both the short and long term, because it is robust to different measures of output and price distortion. Hence, the argument that using price regulation to protect economic growth is undermined, and subsequently, this study lends its support to energy price deregulation. A market oriented energy price regime may improve the resilience of the domestic economy to global oil price shocks.

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http://hdl.handle.net/10453/124308