An Empirical Analysis About Impact Of The International Gold Price Fluctuations On China’s Macro-economy

In recent years, the periodic fluctuations of international gold price have been more significant, especially in the wake of the global financial crisis. The gold price rose from $631 per ounce in 2007 to $1895 per ounce in 2011, an approximately 200% increase during 4 years, and then it dropped rapidly. As we know, gold is one of the important spot and future trading products, and a crucial tool that being applied in hedging in investments, therefore its price has been an indicator of the global economy to some extent. How to stabilize our financial market and prevent economic recession under the impact of international gold price fluctuation has become an important issue which causes widespread concerns of our government, scholars and investors. For those, studying the impact of the international gold price fluctuations on China’s macro-economy has practical significance. The article has discussed this topic both theoretically and empirically.In theory:we firstly introduce the existed domestic as well as international research results, and make a summary of their relevant paper. The second part introduces the related theories of SVAR model; the last part is a further explanation of the fluctuant trend in international gold price. The empirical part is based on monthly data from 2001 January to 2014 February, in which we use the SVAR model to check the correlation and transmission mechanism between the international price fluctuations and China’s macro-economy. Impulse response function analysis indicates that there is a relationship between the international gold price fluctuation and China’s macro-economy. In addition, positive international price shocks have positive long-term effects on China’s level of output and inflation, and negative long-term effect on the exchange rate. Variance decomposition results show that China’s macroeconomic development and the international gold price fluctuation relationship is becoming increasingly more obvious and continuous. This requires that different economic subjects need to make more prudent choice when facing international gold price fluctuations.The innovation of this paper reflects in the following two points:one point is that the paper uses the SVAR model which considers not only the purely data driven approaches but also the factors of economic structure. Another point explains the empirical analysis about impact of the international gold price fluctuations on macro-economy mostly focuses on the foreign market, of which are few related to China’s macro-economy. As a consequence, the paper analyzes the gold price fluctuations impact specifically on China’s macroeconomic factors, and provides empirical basis for relevant countermeasures.