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Does the economic integration of China affect growth and inflation in industrial countries?

  • Dreger, Christian
  • Zhang, Yanqun

The Chinese economic development affects GDP growth and inflation in the advanced countries. The size of the effects is inferred from multivariate time series and structural econometric methods. In particular, the GVAR and the NiGEM are employed to examine the interdependencies between the business cycles in China and industrial countries, including the US, the euro area and Japan. Evidence is based on the responses to a Chinese GDP shock, which is traced to the recent fiscal stimulus package. The different model environments show quite similar results, implying that the impact on GDP growth in the advanced economies is substantial especially for Japan. Real economic effects to the US and the euro area responses are much lower. In addition, international inflation spillovers should be expected.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 38 (2014)
Issue (Month): C ()
Pages: 184-189

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Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:184-189
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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