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The role of China in the world economy: evidence from global VAR model

Author

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  • Anna Sznajderska

    (Warsaw School of Economics, Narodowy Bank Polski)

Abstract

Since the 1980’s China has experienced very high economic growth and its share in global trade has increased rapidly. Nowadays, however, the Chinese economy is rebalancing and its growth is slowing. The paper investigates the spillover effects of a negative demand shock and negative stock price shock in the Chinese economy on other countries. We apply a GVAR model, that enables us to model international linkages between countries. Our results show that a one percent negative China GDP shock reduces global growth by 0.22% in the short run. We find that GDP shock affects emerging economies more strongly than advanced economies. We also show that stock prices shock affects only emerging economies and does not affect advanced economies.

Suggested Citation

  • Anna Sznajderska, 2017. "The role of China in the world economy: evidence from global VAR model," NBP Working Papers 270, Narodowy Bank Polski, Economic Research Department.
  • Handle: RePEc:nbp:nbpmis:270
    Note: The author is grateful for helpful comments and discussions seminar participants at 27th International Trade and Finance Conference in Poznań and 9th Economic Challenges in Enlarged Europe Conference in Tallin.
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    References listed on IDEAS

    as
    1. Alessandro Rebucci & Ambrogio Cesa-Bianchi & M. Hashem Pesaran & TengTeng Xu, 2012. "China's Emergence in the World Economy and Business Cycles in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-75, January.
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    More about this item

    Keywords

    global VAR; China’s slowdown; spillovers;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F10 - International Economics - - Trade - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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