The Impact of Chinese Monetary Policy Shocks on East Asia
AbstractWe study the effects of Chinese monetary policy shocks on China’s major trading partners in East Asia by estimating structural vector autoregressive (SVAR) models for six economies in the region. We find that a monetary expansion in Mainland China leads to an increase in real GDP (temporary) and the price level (permanent) in a number of economies in our sample, most notably in Hong Kong and the Philippines. The impact could result from intertemporal substitution present in a general equilibrium framework which allows for positive domestic impacts of foreign monetary expansions. Our results emphasize the growing importance of China for its neighboring economies and the significance of Chinese shocks for the design of monetary policy in Asian economies.
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Bibliographic InfoPaper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2008.
Length: 30 pages
Date of creation: 03 Jun 2008
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More information through EDIRC
monetary policy shocks; Asian production chain; SVAR; East Asia; China;
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-07 (All new papers)
- NEP-CBA-2008-06-07 (Central Banking)
- NEP-CNA-2008-06-07 (China)
- NEP-MAC-2008-06-07 (Macroeconomics)
- NEP-MON-2008-06-07 (Monetary Economics)
- NEP-OPM-2008-06-07 (Open Economy Macroeconomic)
- NEP-SEA-2008-06-07 (South East Asia)
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