China and Global Macroeconomic Interdependence

49 Pages Posted: 19 Jun 2013 Last revised: 7 Apr 2015

See all articles by Rod Tyers

Rod Tyers

Australian National University (ANU) - School of Economics; The University of Western Australia - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2015

Abstract

China is transitioning toward more inward-focussed growth, causing adverse changes in the product and financial terms of trade in the advanced economies. At the same time, international financial markets tussle between tightening forces associated with the US recovery on the one hand and unconventional monetary expansion in Europe and Japan on the other. The way these shocks interact is examined in this paper using a global macro model with national portfolio rebalancing and asset differentiation and a representation of unconventional monetary policy. Results are found to be sensitive to the contributions of productivity and capital accumulation to China’s growth. When these are offered in realistic combination with the US recovery and the European and Japanese expansion, the combined shocks are deflationary in the US and China, implying that contractionary US monetary policy is not imminent. Monetary responses in the US and China then combine with price targeting regimes in the EU and Japan to expand liquidity globally, amplifying impacts on financial markets and the global distribution of real investment.

Keywords: China, Macroeconomic modelling, Macroeconomic coordination

Suggested Citation

Tyers, Rod, China and Global Macroeconomic Interdependence (March 2015). CAMA Working Paper 9/2015, Available at SSRN: https://ssrn.com/abstract=2280857 or http://dx.doi.org/10.2139/ssrn.2280857

Rod Tyers (Contact Author)

Australian National University (ANU) - School of Economics ( email )

Arndt Building
Australian National University
Canberra, Australian Capital Territory 0200
Australia
61-6-249-5124 (Fax)

The University of Western Australia - Department of Economics ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
61 8 6488 5632 (Phone)

HOME PAGE: http://www.business.uwa.edu.au/school/staff-profiles?type=profile&dn=cn%3DRodney%20Tyers%2Cou%3DEcon

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
41
Abstract Views
318
PlumX Metrics