Is U.S. money causing China's output?
AbstractThis paper tries to answer the long-standing question of whether money causes output. Instead of focusing on domestic monetary policy and output, we analyze U.S. monetary policy and its possible effects on real output in China. Our results indicate that the main monetary instrument in the U.S., the Federal Fund Rate, Granger causes China's output. A second monetary variable, U.S. money supply, does not seem to have a significant effect on China's output. The results are supported by variance decompositions, which indicate that Federal Fund Rate shocks have an effect on China's real output. The findings have important implications for policy makers in China that focus on maintaining a high and stable economic growth.
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Bibliographic InfoArticle provided by Elsevier in its journal China Economic Review.
Volume (Year): 20 (2009)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/chieco
China United States Monetary policy Causality Output VECM;
Other versions of this item:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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- Johansson, Anders C., 2010.
"China’s Growing Influence in Southeast Asia - Monetary Policy and Equity Markets,"
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2010-16, China Economic Research Center, Stockholm School of Economics.
- Anders C. Johansson, 2012. "China’s Growing Influence in Southeast Asia – Monetary Policy and Equity Markets," The World Economy, Wiley Blackwell, vol. 35(7), pages 816-837, 07.
- Johansson, Anders C., 2009.
"Asian Sovereign Debt and Country Risk,"
Working Paper Series
2009-11, China Economic Research Center, Stockholm School of Economics.
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