Changing economic structures and impacts of shocks — evidence from a DSGE model for China
AbstractWe construct a small-scale dynamic stochastic general equilibrium (DSGE) model that features price rigidities, habit formation in consumption and costs in capital adjustment, and calibrate the model with data for the Chinese economy. Our interest centers on the impact of technology and monetary policy shocks for different structures of the Chinese economy. In particular, we evaluate how a rebalancing of the economy from investment-led to consumption-led growth would affect the economic dynamics after a shock occurs. Our findings suggest that a rebalancing would reduce the volatility of the real economy in the event of a technology shock, which provides support for policies aiming to increase the consumption share in China.
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Bibliographic InfoPaper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2011.
Length: 27 pages
Date of creation: 28 Apr 2011
Date of revision:
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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
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DSGE; rebalancing; monetary policy shocks; technology shocks; 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
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-07 (All new papers)
- NEP-CBA-2011-05-07 (Central Banking)
- NEP-DGE-2011-05-07 (Dynamic General Equilibrium)
- NEP-MAC-2011-05-07 (Macroeconomics)
- NEP-TRA-2011-05-07 (Transition Economics)
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- Kai Liu, 2014. "Dollar Hegemony and China’s Economy," Cambridge Working Papers in Economics 1410, Faculty of Economics, University of Cambridge.
- Michael Funke & Michael Paetz & Qianying Chen,, 2012.
"Market and Non-Market Monetary Policy Tools in a Calibrated DSGE Model for Mainland China,"
Quantitative Macroeconomics Working Papers
21207, Hamburg University, Department of Economics.
- Chen, Qianying & Funke, Michael & Paetz, Michael, 2012. "Market and Non-Market Monetary Policy Tools in a Calibrated DSGE Model for Mainland China," BOFIT Discussion Papers 16/2012, Bank of Finland, Institute for Economies in Transition.
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