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Analysis of Economic Shock Effects between China and ASEAN: An Empirical Study Based on Multinational VAR

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  • Yujiang Bi
  • Guangyi Xin

Abstract

This paper investigates the interaction mechanism of economic and trade shocks between ASEAN (Association of Southeast Asian Nations) and China by building a GVAR model. The results indicate that the effects of China’s economic shocks on ASEAN are more distinct than ASEAN’s shocks on China. Negative shocks on China’s growth rate produce negative effects on ASEAN’s economic growth rate. The positive inflation shocks to China’s economy produce long-lasting and prominent impacts on ASEAN’s inflation rate and raise ASEAN’s import and export rate. When China’s export growth rate suffers a negative shock, ASEAN countries’ economic growth rate declines. When ASEAN countries suffer a negative shock, the effects on China’s growth rate, foreign trade, and inflation are quite moderate, but the renminbi depreciates rapidly.

Suggested Citation

  • Yujiang Bi & Guangyi Xin, 2021. "Analysis of Economic Shock Effects between China and ASEAN: An Empirical Study Based on Multinational VAR," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(8), pages 2290-2306, June.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:8:p:2290-2306
    DOI: 10.1080/1540496X.2019.1623783
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    Cited by:

    1. Mala Raghavan & Faisal Khan & Sonia Kumari Selvarajan & Evelyn S. Devadason, 2023. "Cross‐country linkages between ASEAN and non‐ASEAN‐RCEP member states: A global VAR analysis," The World Economy, Wiley Blackwell, vol. 46(6), pages 1782-1814, June.

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