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The Dollar Standard and Stability of China’s Macroeconomy

Author

Listed:
  • Guohua He

    (Department of Finance, Wuhan University, Wuhan, China)

  • Xinxin Chang

    (Department of Finance , Wuhan University, Wuhan, China)

Abstract

This paper studies how Dollar Standard influences the stability of macro-economy of China. Our conclusions are (1) the Dollar Standard influences the stability of macroeconomy of China through risk sharing mechanism of international commodity market and international financial market, (2) the size of an economy and the type of shocks affect the stability of China’s macro-economy. The Dollar Standard will increase the stability of macro-economy of China when the Chinese economic scale is small and internal shocks are weak. While the Dollar Standard will lead to the severe instability of China’s macro-economy, especially to the price and exchange rate, when the Chinese economy scale increases and exogenous shocks play a lion’s share.

Suggested Citation

  • Guohua He & Xinxin Chang, 2013. "The Dollar Standard and Stability of China’s Macroeconomy," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 186-204, December.
    • Handle: RePEc:rjr:romjef:v::y:2013:i:4:p:186-204
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    References listed on IDEAS

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    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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