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Impact of U.S. Interest Rate Cuts and Tariffs on China’s Economy

In: American Monetary Policy Adjustment and Its Impacts

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  • Liu Weiping

    (China Development Bank)

Abstract

Based on the fact that the Federal Reserve cut interest rates for the first time after the financial crisis in 2019 and the trade conflict between China and America is escalating, this chapter uses a two-country DSGE model that includes nominal price stickiness and mortgage guarantee constraint to further study the impact of the Federal Reserve's interest rate cut policy and the US tariff increase on China's macro-economy, and makes numerical simulation and scenario analysis on whether there are financial frictions and intensified trade disputes. Research shows that the Fed's rate cut policy is mainly due to the negative impact of demand, which has an adverse spillover effect on China's economy. Relatively speaking, the negative impact of the tariff increase on China's economy is more obvious than that of the interest rate cut policy.

Suggested Citation

  • Liu Weiping, 2023. "Impact of U.S. Interest Rate Cuts and Tariffs on China’s Economy," Springer Books, in: American Monetary Policy Adjustment and Its Impacts, chapter 0, pages 201-230, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-7810-6_7
    DOI: 10.1007/978-981-99-7810-6_7
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