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China's Economy and the Global Financial Crisis

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  • Sima Siami-Namini

    (Department of Agricultural and Applied Economics, Texas Tech University, USA)

Abstract

The aim of this article is to provide a brief overview of the increasing importance of China's economy around the world economy, and to discuss the impacts of the global financial crisis on China's economy. While China's economic growth remained well above international averages, its drop was of the same order of magnitude as for the US. The question is that how China responds to the global financial crisis. Using two individual vector auto-regression (VAR) models, I analyze the relationship between China's output and two foreign outputs including US and Germany over the period of 1979-2013. The results of VAR Granger-casualty show that China's output and US output does affect each other. Also, China's output affect Germany output, but not vice versa. Besides that, China's output illustrates variance decomposition (VDC) of US output with 3.21%, and US output explains VDC of China's output with 0.14%. China's output illustrates VDC of Germany output with 7.84%, and Germany output explains VDC of China's output with 1.36%. Therefore, the impact of US output shock on China is greater than Germany output shock.

Suggested Citation

  • Sima Siami-Namini, 2017. "China's Economy and the Global Financial Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 259-265.
    • Handle: RePEc:eco:journ1:2017-05-31
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    References listed on IDEAS

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    Cited by:

    1. Sima Siami-Namini & Daniel Muhammad & Fahad Fahimullah, 2018. "The Short and Long Run Effects of Selected Variables on Tax Revenue - A Case Study," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 23-32, September.

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    More about this item

    Keywords

    Global Financial Crisis; China's Economy; Vector Auto-regression model (VAR).;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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