IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

International Effects of China's Rise and Transition: Neoclassical and Keynesian Perspectives

  • Rod Tyers

Opinion over the global implications of China's rise is divided between critics, who see it as having developed at the expense of both investment and employment in the US, Europe and Japan and proponents who emphasise improvements in the terms of trade and reductions to the cost of financing that stem from China's supply of light manufactures, its demand for Western capital and luxury goods and its high saving. The criticism implies Keynesian assumptions while proponents take a neoclassical perspective. In this paper, both are embodied in a simple global, short run, macro model that emphasises bilateral linkages via both trade and investment and so helps clarify the international effects of both China's expansion, its high saving and of the new "inward focus" of its policy regimes. For the US and Europe, China's successful export-oriented growth is shown to offer net benefits, though there are partially offsetting Keynesian effects that have caused considerable distributional stress. It's recent, slower, more consumption focussed growth is shown to be unambiguously beneficial in those regions and in Japan.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://cama.crawford.anu.edu.au/pdf/working-papers/2013/442013.pdf
Download Restriction: no

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-44.

as
in new window

Length: 45 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-44
Contact details of provider: Postal:
Crawford Building, Lennox Crossing, Building #132, Canberra ACT 2601

Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: http://cama.crawford.anu.edu.au
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Kuijs, Louis, 2006. "How will China's saving-investment balance evolve ?," Policy Research Working Paper Series 3958, The World Bank.
  2. Niven Winchester, 2006. "Trade and Rising Wage Inequality: What can we learn from a Decade of Computable General Equilibrium Analysis?," Working Papers 0606, University of Otago, Department of Economics, revised Oct 2006.
  3. Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2005. "An essay on the revived Bretton Woods system," Proceedings, Federal Reserve Bank of San Francisco, issue Feb.
  4. Guonan Ma & Wang Yi, 2010. "China's high saving rate: myth and reality," BIS Working Papers 312, Bank for International Settlements.
  5. Joseph F. Francois & Douglas Nelson, 1998. "Trade, Technology, and Wages: General Equilibrium Mechanics," Tinbergen Institute Discussion Papers 98-058/2, Tinbergen Institute.
  6. World Bank, 2013. "Global Development Horizons : Capital for the Future - Saving and Investment in an Interdependent World," World Bank Publications, The World Bank, number 13431, December.
  7. Charles Yuji Horioka & Junmin Wan, 2007. "The determinants of household saving in China: a dynamic panel analysis of provincial data," Working Paper Series 2007-28, Federal Reserve Bank of San Francisco.
  8. Rod Tyers & Yongzheng Yang, 1997. "Trade with Asia and skill upgrading: Effects on labor markets in the older industrial countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(3), pages 383-418, September.
  9. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  10. Rod Tyers & Yongxiang Bu & Ian Bain, 2006. "China’s Equilibrium Real Exchange Rate: A Counterfactual Analysis," ANU Working Papers in Economics and Econometrics 2006-466, Australian National University, College of Business and Economics, School of Economics.
  11. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2008. "Inequality and Unemployment in a Global Economy," NBER Working Papers 14478, National Bureau of Economic Research, Inc.
  12. Vipin Arora, 2011. "Arbitrage and the Price of Oil," ANU Working Papers in Economics and Econometrics 2011-535, Australian National University, College of Business and Economics, School of Economics.
  13. Jonathan Haskel & Robert Z. Lawrence & Edward E. Leamer & Matthew J. Slaughter, 2012. "Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 119-40, Spring.
  14. di Giovanni, Julian & Levchenko, Andrei A. & Zhang, Jing, 2013. "The Global Welfare Impact of China: Trade Integration and Technological Change," CEPR Discussion Papers 9683, C.E.P.R. Discussion Papers.
  15. W. Max Corden, 1985. "On Transmission and Coordination Under Flexible Exchange Rates," NBER Chapters, in: International Economic Policy Coordination, pages 8-36 National Bureau of Economic Research, Inc.
  16. Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2006. "An Equilibrium Model of Global Imbalances and Low Interest Rates," 2006 Meeting Papers 894, Society for Economic Dynamics.
  17. Chang-Tai Hsieh & Peter Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," Working Papers 09-04, Center for Economic Studies, U.S. Census Bureau.
  18. Rod Tyers & Jane Golley & Bu Yongxiang & Iain Bain, 2007. "China's Economic Growth and its Real Exchange Rate," DEGIT Conference Papers c012_014, DEGIT, Dynamics, Economic Growth, and International Trade.
  19. Christopher Martin & Costas Milas, 2012. "Quantitative Easing: A Sceptical Survey," Working Paper Series 73_12, The Rimini Centre for Economic Analysis.
  20. David Laibson & Johanna Mollerstrom, 2010. "Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis," Economic Journal, Royal Economic Society, vol. 120(544), pages 354-374, 05.
  21. Richard G. Harris & Peter Robertson, 2009. "Trade, Wages And Skill Accumulation In The Emerging Giants," Economics Discussion / Working Papers 09-19, The University of Western Australia, Department of Economics.
  22. Stephen Tokarick, 2005. "Quantifying the Impact of Trade on Wages: the Role of Nontraded Goods," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 841-860, November.
  23. Markus Knell & Helmut Stix, 2006. "Three decades of money demand studies: differences and similarities," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 805-818.
  24. David H. Autor & David Dorn & Gordon H. Hanson, 2012. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," NBER Working Papers 18054, National Bureau of Economic Research, Inc.
  25. Shang-Jin Wei & Xiaobo Zhang, 2009. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," NBER Working Papers 15093, National Bureau of Economic Research, Inc.
  26. Corden, W. Max & Turnovsky, Stephen J., 1983. "Negative international transmission of economic expansion," European Economic Review, Elsevier, vol. 20(1-3), pages 289-310, January.
  27. Rod Tyers & Ying Zhang, 2011. "Appreciating the Renminbi," The World Economy, Wiley Blackwell, vol. 34(2), pages 265-297, 02.
  28. N'Diaye, Papa & Zhang, Ping & Zhang, Wenlang, 2010. "Structural reform, intra-regional trade, and medium-term growth prospects of East Asia and the Pacific--Perspectives from a new multi-region model," Journal of Asian Economics, Elsevier, vol. 21(1), pages 20-36, February.
  29. Dimaranan, Betina & Ianchovichina, Elena & Martin, William J., 2007. "China, India, and the future of the world economy : fierce competition or shared growth?," Policy Research Working Paper Series 4304, The World Bank.
  30. Jing Zhang, 2013. "Global Welfare Impact of China: Trade Integration and Technology Change," 2013 Meeting Papers 630, Society for Economic Dynamics.
  31. Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 145-170, March.
  32. Richard G. Harris & Peter E. Robertson & Jessica Y. Xu, 2010. "The International Effects of China's Growth, Trade and Ecucation Booms," Economics Discussion / Working Papers 10-04, The University of Western Australia, Department of Economics.
  33. McKibbin, W.J. & Wilcoxen, P.J., 1995. "The Theoretical and Empirical Structure of the G-Cubed Model," Papers 118, Brookings Institution - Working Papers.
  34. Pedro Teles & Ruilin Zhou, 2005. "A stable money demand: Looking for the right monetary aggregate," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 50-63.
  35. Tyers, R. & Yang, Y., 1996. "Trade with Asia and Skill Upgrading: Effects on Factor Markets in the Older Industrial Countries," CEPR Discussion Papers 346, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  36. Liugang Sheng, 2013. "Did China diversify its foreign reserves?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 102-125, 01.
  37. Dong He & Lillian Cheung & Wenlang Zhang & Tommy Wu, 2012. "How would Capital Account Liberalization Affect China's Capital Flows and the Renminbi Real Exchange Rates?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 20(6), pages 29-54, November.
  38. Leamer, Edward E, 1996. "Wage Inequality from International Competition and Technological Change: Theory and Country Experience," American Economic Review, American Economic Association, vol. 86(2), pages 309-14, May.
  39. Rod Tyers, 2013. "Looking Inward for Transformative Growth in China," CAMA Working Papers 2013-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  40. Barry Eichengreen, 2004. "Global Imbalances and the Lessons of Bretton Woods," NBER Working Papers 10497, National Bureau of Economic Research, Inc.
  41. Robert J. Shiller & John Y. Campbell & Kermit L. Schoenholtz, 1983. "Forward Rates and Future Policy: Interpreting the Term Structure of Interest Rates," Cowles Foundation Discussion Papers 667, Cowles Foundation for Research in Economics, Yale University.
  42. Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2009. "Bretton Woods II Still Defines the International Monetary System," NBER Working Papers 14731, National Bureau of Economic Research, Inc.
  43. Rod Tyers, 2011. "Japanese Economic Stagnation: Causes And Global Implications," CAMA Working Papers 2011-20, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  44. Jin, Ye & Li, Hongbin & Wu, Binzhen, 2011. "Income inequality, consumption, and social-status seeking," Journal of Comparative Economics, Elsevier, vol. 39(2), pages 191-204, June.
  45. Tyers, Rod & Yang, Yongzheng, 2000. "Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 23-41, Autumn.
  46. Warwick J. McKibbin & Wing Thye Woo, 2003. "The Consequences of China's WTO Accession for Its Neighbors," Asian Economic Papers, MIT Press, vol. 2(2), pages 1-38.
  47. David Burton & Wanda Tseng & Kalpana Kochhar & Hoe Ee Khor & Dubravko Mihaljek, 1994. "Economic Reform in China: A New Phase," IMF Occasional Papers 114, International Monetary Fund.
  48. Tyers, Rod, 2014. "Looking inward for transformative growth," China Economic Review, Elsevier, vol. 29(C), pages 166-184.
  49. Dennis Tao Yang, 2012. "Aggregate Savings and External Imbalances in China," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 125-46, Fall.
  50. Andrei A. Levchenko & Julian di Giovanni, 2009. "Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement," IMF Working Papers 09/181, International Monetary Fund.
  51. Peter E Robertson, 2013. "The Global Impact of China's Growth," Economics Discussion / Working Papers 13-13, The University of Western Australia, Department of Economics.
  52. Blanchard, Olivier J & Giavazzi, Francesco, 2006. "Rebalancing Growth in China: A Three-Handed Approach," CEPR Discussion Papers 5403, C.E.P.R. Discussion Papers.
  53. Nicholas R. Lardy, 2012. "Sustaining China's Economic Growth after the Global Financial Crisis," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6260, December.
  54. Warwick J. McKibbin, 1987. "The Economics of International Policy Coordination," RBA Research Discussion Papers rdp8705, Reserve Bank of Australia.
  55. Yiping Huang & Kunyu Tao, 2010. "Factor Market Distortion and the Current Account Surplus in China," Asian Economic Papers, MIT Press, vol. 9(3), pages 1-36, October.
  56. Chang-Tai Hsieh & Ralph Ossa, 2011. "A Global View of Productivity Growth in China," Global COE Hi-Stat Discussion Paper Series gd10-166, Institute of Economic Research, Hitotsubashi University.
  57. Ligang Song & Jidong Yang & Yongsheng Zhang, 2011. "State‐owned Enterprises' Outward Investment and the Structural Reform in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 19(4), pages 38-53, 07.
  58. Jane Golley & Rod Tyers, 2012. "Population Pessimism and Economic Optimism in the Asian Giants," The World Economy, Wiley Blackwell, vol. 35(11), pages 1387-1416, November.
  59. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  60. Charles Yuji Horioka & Akiko Terada-Hagiwara, 2011. "The Determinants and Long-term Projections of Saving Rates in Developing Asia," NBER Working Papers 17581, National Bureau of Economic Research, Inc.
  61. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
  62. Nicholas R. Lardy, 2006. "China: Toward a Consumption-Driven Growth Path," Policy Briefs PB06-6, Peterson Institute for International Economics.
  63. repec:cii:cepiei:2010-2ta is not listed on IDEAS
  64. Rey, Helene, 2013. "Dilemma not trilemma: the global cycle and monetary policy independence," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 1-2.
  65. Menzie D. Chinn & Hiro Ito, 2005. "Current Account Balances, Financial Development and Institutions: Assaying the World "Savings Glut"," NBER Working Papers 11761, National Bureau of Economic Research, Inc.
  66. Tyers, Rod & Duncan, Ron, 1999. "Trade, Technology and Labor Markets: General Equilibrium Perspectives," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 226-264.
  67. Yanrui Wu, 2011. "Total factor productivity growth in China: a review," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 9(2), pages 111-126.
  68. Francois Joseph F & Wignaraja Ganeshan, 2008. "Economic Implications of Asian Integration," Global Economy Journal, De Gruyter, vol. 8(3), pages 1-48, September.
  69. Anthony J. Makin & Paresh Kumar Narayan, 2009. "Has International Trade in Saving Improved US Economic Welfare?," The Economic Record, The Economic Society of Australia, vol. 85(s1), pages S2-S9, 09.
  70. C. Fred Bergsten & Charles Freeman & Nicholas R. Lardy, 2008. "China's Rise: Challenges and Opportunities," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4174, December.
  71. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.
  72. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
  73. Rod Tyers & Ying Zhang & Tsun Se Cheong, 2013. "China’s Saving and Global Economic Performance," Economics Discussion / Working Papers 13-20, The University of Western Australia, Department of Economics.
  74. Joseph Francis Francois & Ganeshan Wignaraja, 2008. "Economic Implications of Deeper Asian Integration," Economics working papers 2008-13, Department of Economics, Johannes Kepler University Linz, Austria.
  75. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-92, June.
  76. Eickmeier, Sandra & Kühnlenz, Markus, 2013. "China's role in global inflation dynamics," Discussion Papers 07/2013, Deutsche Bundesbank, Research Centre.
  77. Michael Dooley & Peter Garber, 2005. "Is It 1958 or 1968? Three Notes on the Longevity of the Revived Bretton Woods System," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(1), pages 147-210.
  78. McKibbin, Warwick J. & Sundberg, Mark W., 1993. "Implications for the Asia-Pacific region of coordination of macroeconomic policies in the OECD," Journal of Policy Modeling, Elsevier, vol. 15(1), pages 13-48, February.
  79. Niven Winchester & David Greenaway & Geoffrey V. Reed, 2006. "Skill Classification and the Effects of Trade on Wage Inequality," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(2), pages 287-306, July.
  80. Chang-Tai Hsieh & Ralph Ossa, 2011. "A Global View of Productivity Growth in China," NBER Working Papers 16778, National Bureau of Economic Research, Inc.
  81. Dong He & Paul Luk, 2013. "A Model of Chinese Capital Account Liberalisation," Working Papers 122013, Hong Kong Institute for Monetary Research.
  82. Winchester, Niven & Greenaway, David, 2007. "Rising wage inequality and capital-skill complementarity," Journal of Policy Modeling, Elsevier, vol. 29(1), pages 41-54.
  83. Horag Choi & Nelson C. Mark & Donggyu Sul, 2007. "Endogenous Discounting, the World Saving Glut and the U.S. Current Account," NBER Working Papers 13571, National Bureau of Economic Research, Inc.
  84. Luke Deer & Ligang Song, 2012. "China's Approach to Rebalancing: A Conceptual and Policy Framework," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 20(1), pages 1-26, 01.
  85. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
  86. Ito, Hiro, 2009. "U.S. current account debate with Japan then, with China now," Journal of Asian Economics, Elsevier, vol. 20(3), pages 294-313, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2013-44. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cama Admin)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.