Abstract
This paper studies the impact of risk shock on the Chinese economy using a New-Keynesian model with financial frictions. The study shows that risk shock is an important driving force for the fluctuations of GDP, investment, capital, credit, and credit spread in China. However, the role of risk shock in driving China’s business cycles is not as crucial as in the US economy (see Christiano, Motto, and Rostagno 2014). There are three main reasons that explain the different performance of risk shocks in China and the US: the volatility of risk shock, the effect of equity shock, and the influence of macroeconomic policies are all different in China and in the US. Our paper contributes to an understanding of the business cycles in China during the period from 1999 to 2015, particularly in comparison with business cycles in the US.
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©2019 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontiers
- The Precautionary Saving Effect of Government Consumption
- Advanced
- Optimal taxation under equilibrium unemployment and economic profits
- Labor supply, income distribution, and tax progressivity in a search model
- Housing market and labor market search
- Rented vs. owner-occupied housing and monetary policy
- On the cyclicality of real wages and wage differentials
- Aggregate implications of occupational inheritance in China and India
- Barriers to firm growth in open economies
- The role of IPRs on prices, wages and growth in a two country directed technical change model
- Fiscal counter-cyclicality and productive investment: evidence from advanced economies
- Contributions
- Is risk shock a key factor driving business cycles in China?
- Did capital replace labor? New evidence from offshoring
- International capital mobility and structural transformation
- Redistributive policies and technology diffusion
Artikel in diesem Heft
- Frontiers
- The Precautionary Saving Effect of Government Consumption
- Advanced
- Optimal taxation under equilibrium unemployment and economic profits
- Labor supply, income distribution, and tax progressivity in a search model
- Housing market and labor market search
- Rented vs. owner-occupied housing and monetary policy
- On the cyclicality of real wages and wage differentials
- Aggregate implications of occupational inheritance in China and India
- Barriers to firm growth in open economies
- The role of IPRs on prices, wages and growth in a two country directed technical change model
- Fiscal counter-cyclicality and productive investment: evidence from advanced economies
- Contributions
- Is risk shock a key factor driving business cycles in China?
- Did capital replace labor? New evidence from offshoring
- International capital mobility and structural transformation
- Redistributive policies and technology diffusion