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

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  • Dreger, Christian
  • Zhang, Yanqun

Abstract

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.

Suggested Citation

  • Dreger, Christian & Zhang, Yanqun, 2014. "Does the economic integration of China affect growth and inflation in industrial countries?," Economic Modelling, Elsevier, vol. 38(C), pages 184-189.
    • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:184-189
    DOI: 10.1016/j.econmod.2013.12.018
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    6. Konstantinos N. Konstantakis & Panayotis G. Michaelides & Livia Chatzieleftheriou & Arsenios‐Georgios N. Prelorentzos, 2022. "Crisis and the Chinese miracle: A network—GVAR model," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 900-921, July.
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    14. Konstantakis, Konstantinos N. & Soklis, George & Michaelides, Panayotis G., 2017. "Tourism expenditures and crisis transmission: A general equilibrium GVAR analysis with network theory," Annals of Tourism Research, Elsevier, vol. 66(C), pages 74-94.
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    17. Faryna, Oleksandr & Simola, Heli, 2021. "The transmission of international shocks to CIS economies: A global VAR approach," Economic Systems, Elsevier, vol. 45(2).
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    More about this item

    Keywords

    GVAR; Chinese integration; Shock transmission;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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