How trade drives fluctuations in macroeconomics in China – A multi-level dynamic factor approach

Jianghuai Hou, Fang Wang and Ji Zhang

China Economic Review, 2025, vol. 91, issue C

Abstract: Investigating how international trade with different regions and in different indus- tries affects the macroeconomy is crucial for policymaking and economic forecasting, particularly in the context of trade frictions. Using a dynamic hierarchical factor model (DHFM) and factor-augmented vector autoregression (FAVAR) model, we extract factors from extensive trade data to explore their impacts on and interactions with the macroeconomy.

Keywords: International trade; Macroeconomy; DHFM; FAVAR; Montary policy (search for similar items in EconPapers)
JEL-codes: C32 E52 F40 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:91:y:2025:i:c:s1043951x25000513

DOI: 10.1016/j.chieco.2025.102393

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