Win-Win? Assessing the Global Impact of the Chinese Economy

27 Pages Posted: 22 Jan 2021

See all articles by Risto Herrala

Risto Herrala

European Central Bank (ECB) - Directorate General International and European Relations

Fabrice Orlandi

European Central Bank (ECB)

Date Written: February 12, 2020

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.

JEL Classification: C2, F15, F440

Suggested Citation

Herrala, Risto and Orlandi, Fabrice, Win-Win? Assessing the Global Impact of the Chinese Economy (February 12, 2020). BOFIT Discussion Paper No. 4/2020, Available at SSRN: https://ssrn.com/abstract=3764759

Risto Herrala (Contact Author)

European Central Bank (ECB) - Directorate General International and European Relations ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Fabrice Orlandi

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 7222 (Phone)
+49 69 1344 6353 (Fax)

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