China's increasing global influence: Changes in international growth linkages

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  • Erdenebat Bataa
    National University of Mongolia
  • Denise R Osborn
    University of Manchester
  • Marianne Sensier
    University of Manchester
Changes in linkages between growth in the USA, Euro area and China are investigated utilising an iterative procedure for detecting structural breaks in VAR coefficients and disturbance covariance matrix. We find dynamics to be unchanged and, accounting for volatility changes, cross-country correlations are constant until the end of 2007. Although largely isolated from the other large economies until 2007, growth in China is subsequently strongly related to that of the US and the Euro area. The effects are illustrated using generalised impulse responses and forecast error variance decompositions. The increased international synchronisation found may be associated with the effects of the Great Recession on the US and Euro area together with China's extraordinary export growth since joining the World Trade Organisation in 2001.
Original languageEnglish
Pages (from-to)194-206
JournalEconomic Modelling
Volume74
Publication statusPublished - 2018
Externally publishedYes

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