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US monetary policy shocks and the Chinese economy: a GVAR approach
Journal article   Peer reviewed

US monetary policy shocks and the Chinese economy: a GVAR approach

Yujiang Bi and Sajid Anwar
Applied Economics Letters, Vol.24(8), pp.553-558
2017
url
https://doi.org/10.1080/13504851.2016.1210761View
Published Version

Abstract

economic shocks monetary policy transmission GVAR China G15 E52
Using a global vector auto regressive (GVAR) methodology, this article examines the impact of US monetary policy shocks on China's major macroeconomic indicators. Our analysis reveals that a positive shock to the US money supply growth rate initially increases China's inflation rate but after some time this effect completely disappears. This shock also raises China's short-term interest rate and the Chinese currency appreciates against the US dollar. A positive shock to the US short-term interest rate increases China's short-term interest rate but the real output growth and inflation rates decline and the Chinese currency appreciates.

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