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Study On The Comovement And Transmission Mechanics Of China And East Asia's Business Cycles

Posted on:2010-03-24Degree:MasterType:Thesis
Country:ChinaCandidate:W S WuFull Text:PDF
GTID:2189360272495109Subject:Western economics
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Along with rapid economic growth in recent years, China's comprehensive national strength is rapidly increasing and it's impact on the world economy, especially on East Asian economies continues is deepening. On the other hand, the business cycle of East Asia also increasingly shows significant impact on China's economy running. The increasingly close economic ties between East Asian and China make economic fluctuations of one of them will impact that of the other, through international trade, international investment and international capital flows and many other real or virtual ways,, leading to stronger inter-economic co-movement. In short, China's business cycle has become a part of the East Asian business cycle. Facing the most serious financial crisis since the early 30 century, the study of the running posture and conduction channels of Chinese business cycle and East Asian business cycle, as well as the new features of China's business cycles and business cycles in East Asia have important theoretical and practical significance. Because that will help China to grasp the operation of the East Asian business cycle posture, strengthen international economic cooperation and international policy coordination, the implement more effective macroeconomic regulation and control, make good use of the opportunities that East Asian economic growth brings to China's economy, circumvent the risk comes along with East Asian economic fluctuations, especially with the current global financial crisis, to ensure that China's economic maintain a smooth running,From the qualitative perspective, this article observes the contact and mutual influence channels of Chinese and East Asian economic. From the quantitative point of view, by using correlation analysis, vector auto regression, Granger causality test, impulse response functions and variance decomposition and other methods, this article looks into the existence and size of the fluctuations and co-movement of China's business cycle and the East Asian business cycle, the Granger causal relationship between China's business cycle and East Asian business cycle fluctuations, the conduction process for China's business cycle, the East Asian business cycle and the dynamics of the impact of bilateral trade mutual, as well as the proportion of the factors that can explain the fluctuations.This article comes to the following conclusions: (1) the majority of East Asian countries (regions) show high export dependence on China. Hong Kong, for example, up to 43.03%. The entire East Asian region, up to 17.33%. This high export dependence, coupled with the Trade surplus China gains from Europe and the United States, which is used to compensate for the substantial trade deficit with East Asia, highlights China's irreplaceable economy role in the East Asia; (2) Gradual increase of the correlation between China's business cycle and the East Asian business cycle have shown from 1992 to 2007. 1992-1997, the number is -0.6, but from 1998 to 2001, it increased to 0.6 and 2002-2007, reached 0.7, indicating that China's economy has been merging into East Asian economy and the inter - dependence has been enhanced too; (3) China's economy and the entire East Asian economy has shown signs of being co-mobility. China's economic fluctuations and the economic fluctuations of East Asia are broadly synchronous and the Asian economy and China's economic interdependence have been gradually increasing. China's business cycle is synchronous with Hong Kong, Indonesia, Japan, Laos, Malaysia, the Philippines and Vietnam, is ahead of Brunei, Burma 4 periods, leading in the region of Macau, Cambodia 3 periods, ahead of South Korea, Thailand 1 period, behind Singapore. It indicates that China's economy has been endogenous within East Asian economies and most countries in East Asia show strong dependence on Chinese economy. (4) There is Granger causality between China's economic growth and economic growth in East Asian, China's economic growth is the Granger causes for East Asia's economic growth, but the contrary does not hold. Through the test of significance(5%),China's economic growth are the Granger causes for some other East Asian countries', including Brunei, Indonesia, Japan, Korea, Laos, China and Macao, Malaysia, the Philippines, Singapore, Thailand and Vietnam, which shows significantly pulling effect of Chinese economy for East Asia. (5) The impulse response function and variance decomposition studies on Chinese economy and East Asian economies show that Chinese GDP are the major factor to explain most East Asian countries' GDP and trade fluctuations. Bilateral trade is an important conduction channels that impact China's economy and other East Asian economies. Along with the deepening of China's reform and opening up process, China's economy will impact East Asian economies and bilateral trade more significantly, China's economy will certainly contribute even more to the economies of East Asia.In this paper, the possible innovation can be: (1) quantitative study on the East Asian economy's export dependence, China's trade intensity, as well as the relevance, co-movement and transmission mechanics of business cycles of China and East Asia, the Granger causes for Chinese economy and East Asian economic growth; (2) based on quantitative study, present the response measures for taking advantage of the growth of East Asian, circumventing the risk associated with fluctuations in East Asia.
Keywords/Search Tags:business cycles of China, business cycles of East Asia, co-movement, transmission mechanics
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