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China's increasing global influence: Changes in international growth linkages

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  • Bataa, Erdenebat
  • Osborn, Denise R.
  • Sensier, Marianne

Abstract

Changes in linkages between growth in the USA, Euro area and China are investigated utilising an iterative procedure for detecting structural breaks in VAR coefficients and disturbance covariance matrix. We find dynamics to be unchanged and, accounting for volatility changes, cross-country correlations are constant until the end of 2007. Although largely isolated from the other large economies until 2007, growth in China is subsequently strongly related to that of the US and the Euro area. The effects are illustrated using generalised impulse responses and forecast error variance decompositions. The increased international synchronisation found may be associated with the effects of the Great Recession on the US and Euro area together with China's extraordinary export growth since joining the World Trade Organisation in 2001.

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  • Bataa, Erdenebat & Osborn, Denise R. & Sensier, Marianne, 2018. "China's increasing global influence: Changes in international growth linkages," Economic Modelling, Elsevier, vol. 74(C), pages 194-206.
    • Handle: RePEc:eee:ecmode:v:74:y:2018:i:c:p:194-206
    DOI: 10.1016/j.econmod.2018.05.014
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    Cited by:

    1. Lance A. Fisher & Hyeon‐seung Huh & David Kim, 2020. "Growth Shocks in the United States and China: Effects on Australia's Growth," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 185-203, September.
    2. Mardi Dungey & Denise R. Osborn, 2020. "The Gains from Catch‐up for China and the USA: An Empirical Framework," The Economic Record, The Economic Society of Australia, vol. 96(314), pages 350-365, September.
    3. Erdenebat Bataa, 2019. "Growth and Inflation Regimes in Greater Tumen Initiative Area," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 7(1), pages 15-29, November.
    4. Sanjay Kumar Rout & Hrushikesh Mallick, 2021. "International interdependency of macroeconomic activities: a multivariate empirical analysis," International Economics and Economic Policy, Springer, vol. 18(2), pages 425-450, May.
    5. Luciano Campos & Jesús Ruiz Andújar, 2022. "Common and idiosyncratic components of Latin American business cycles connectedness," Journal of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 691-722, December.
    6. Sanjay Kumar Rout & Hrushikesh Mallick, 2020. "Transmission of International Financial Shocks: A Cross Country Analysis," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(4), pages 236-259, December.

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    More about this item

    Keywords

    China; International growth; Structural breaks; Globalisation;
    All these keywords.

    JEL classification:

    • 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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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