China Spillovers: Aggregate and Firm-Level Evidence

By Alexander Copestake, Melih Firat, Davide Furceri, Chris Redl

October 17, 2023

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Alexander Copestake, Melih Firat, Davide Furceri, and Chris Redl. China Spillovers: Aggregate and Firm-Level Evidence, (USA: International Monetary Fund, 2023) accessed December 11, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We estimate the impact of distinct types of slowdowns in China on countries and firms globally. First, we combine a structural vector autoregression framework with a broad-based measure of domestic economic activity in China to distinguish supply versus demand components of Chinese growth. We then use local projection models to assess the responses to such shocks of GDP growth (revenue) in other countries (firms). We find that: (i) both supply and demand slowdowns are associated with substantial declines in partner GDP and firm revenue; (ii) negative spillovers are larger in countries and firms with stronger trade links with China; and (iii) spillovers from Chinese supply shocks are stronger than spillovers from demand shocks, both at the aggregate- and firm-level.

Subject: Consumption, Econometric analysis, Economic theory, Exports, Financial sector policy and analysis, International trade, National accounts, Spillovers, Structural vector autoregression, Supply shocks

Keywords: China spillover, China Spillovers, Consumption, Exports, Global, Spillovers, Spillovers from demand shocks, Structural vector autoregression, Supply and demand demand shock, Supply and demand slowdown, Supply shocks, Supply-Demand Decomposition

Publication Details

Pages:

57
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/206
Stock No:

WPIEA2023206
ISBN:

9798400257353
ISSN:

1018-5941

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