China in 2005 Revisited: The Implications of International Capital Mobility

Elena Ianchovichina, Robert McDougall and Thomas Hertel

GTAP Working Papers from Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University

Abstract: This paper revisits the analysis of the implications of China's economic growth on her trading partners presented in Arndt et al. (1997) using a dynamic, applied general equilibrium model that features international capital mobility. We find that accounting for the impact of China's growth on international capital markets reverses some of the findings in the paper by Arndt et al. In particular, net creditor regions lose while net debtor regions benefit from an economic slowdown in China due to the resulting decline in the cost of capital. Our analysis also reveals the importance of capital accumulation effects which interact with non-capital factor productivity and tax distortions in determining regional welfare.

Date: 2000
Note: GTAP Working Paper No. 12
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Persistent link: https://EconPapers.repec.org/RePEc:gta:workpp:402

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