The Transmission of Productivity and Investment Shocks in the Asia Pacific Region
An important aspect of macroeconomic interdependence in the Asia Pacific region is the adjustment of trade and current account balances in response to changes in saving and investment rates in individual economies. Greater trade flows, reliance on imported intermediate goods as well as more integrated capital markets imply that shifts in private or public saving and investment rates in an economy in the region can potentially have large impacts on other economies. This paper explores the quantitative nature of these linkages by focusing on a number of shocks within the context of a new dynamic multi-sector global model called the Asia-Pacific G- Cubed Model (AP-GCUBED). This model integrates sectoral adjustment with macroeconomic interdependence including explicit treatment of capital flows to explore the implications of a variety of productivity and investment shocks in the Asia Pacific Region. The first shock considered is a permanent decline in private investment in Japan. The second shock is a temporary rise in total factor productivity growth in China. The fall in Japanese investment is found to have a significant effect on trade flows and financial flows in the region whereas the rise in Chinese productivity has a quite different effect on the region . A key aspect of the study is the role of international capital flows, imported intermediate goods and expectations in determining the short run and longer term adjustment within the region to these types of shocks.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: 1775 Massachusetts Ave NW, Washington DC 20036-2188|
Web page: http://www.brook.edu/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:wop:briedp:129. 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: (Thomas Krichel)
If references are entirely missing, you can add them using this form.