The impact of Chinese monetary policy shocks on East Asia
Kozluk, Tomasz; Mehrotra, Aaron (02.06.2008)
JulkaisusarjaBOFIT Discussion Papers
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201408072075
We study the effects of Chinese monetary policy shocks on China s major trading partners in East Asia by estimating structural vector autoregressive (SVAR) models for six economies in the region. We find that a monetary expansion in Mainland China leads to an increase in real GDP (temporary) and the price level (permanent) in a number of economies in our sample, most notably in Hong Kong and the Philippines. The impact could result from intertemporal substitution present in a general equilibrium framework which allows for positive domestic impacts of foreign monetary expansions. Our results emphasize the growing importance of China for its neighboring economies and the significance of Chinese shocks for the design of monetary policy in Asian economies. Keywords: monetary policy shocks, Asian production chain, SVAR, East Asia, China, JEL: E52, F42
Published in Economics of Transition, Vol. 17, Issue 1, 2009, pp. 121-145 and CESifo Working Papers 2710 sekä Economics of Transition 17 ; 1 ; 2009.