Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121116
Authors: 
Dreger, Christian
Zhang, Yanqun
Year of Publication: 
2013
Series/Report no.: 
FIW Working Paper 116
Abstract: 
The Chinese economic development affects GDP growth and inflation in the advanced countries. A GVAR approach is used to model the interdependencies between the business cycles in China and industrial countries, including the US, the euro area and Japan. For robustness, the results are compared to those obtained by leading structural econometric models, such as NiGEM and OEF. Evidence is based on the responses to a Chinese shock stemming from the recent fiscal stimulus package. The results indicate that the impact on GDP growth in the advanced economies is substantial for the Asian region. The expansionary effects to the US and the euro area responses are much lower and decrease due to rising inflation pressure. The analysis also reveals that China is still highly vulnerable to shocks in industrial countries, including the government debt crisis in the euro area.
Subjects: 
GVAR
Chinese integration
shock transmission
euro area debt crisis
JEL: 
E32
F15
C51
Document Type: 
Working Paper

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