Win-Win? Assessing the global impact of the Chinese economy

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Title: Win-Win? Assessing the global impact of the Chinese economy
Author: Herrala, Risto ; Orlandi, Fabrice
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 4/2020
Year of publication: 2020
Publication date: 12.2.2020
Published in: Published in Asia and the Global Economy, Volume 1, Issue 1, January 2021
Pages: 27
Subject (yso): talouskasvu; vaikutukset; kansainvälinen talous; hinnat
Keywords: Bofit-kokoelma; Kiina; Kiinan talous
JEL: C2; F15; F440
Other keywords: Chinese economy; global spillover; real time data; China
Abstract: We study the global impact of the Chinese economy based on a novel indirect approach where the spillover effect is quantified from a forecast error model under relatively favorable identifying conditions. Findings from the real-time World Economic Outlook data over the period 2004 - 2015 indicate that an increase in economic growth in China had a negative impact on most other economies one to two years ahead. The estimations furthermore uncover evidence at the global level that spillover propagated by influencing prices, including global commodity prices, which tend to increase in reaction to accelerating economic growth in China.
Table of contents: Abstract .. 4 I Introduction .. 5 II The empirical approach .. 7 A The estimable equation .. 7 B Finite sample properties .. 10 III Empirical analysis .. 12 A The data .. 12 B Estimation results .. 14 C Robustness tests .. 16 D The spillover channels .. 19 IV Discussion and concluding remarks .. 22 References .. 23

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