The global recession and China's stimulus package: A general equilibrium assessment of country level impacts

Xinshen Diao (), Yumei Zhang and Kevin Z. Chen

China Economic Review, 2012, vol. 23, issue 1, 1-17

Abstract: A dynamic computable general equilibrium model is developed to assess the impact of the recent global recession and the Chinese government's stimulus package on China's economic growth. By designing two scenarios – one with and one without the stimulus package – the model results show that GDP growth rate in 2009 could have fallen to 2.9% without the stimulus package, mainly as a result of the sharp decline in exports of manufactured goods. Under the stimulus scenario, with the generated additional demand on investment goods, the Chinese economy grows 8–10% in 2009 and the succeeding years. The model also measures the overall gains of the stimulus package, and the cumulative GDP growth difference between the two scenarios for 2009–15 is about RMB76 trillion.

Keywords: Global financial crisis; China's stimulus package; General equilibrium modeling (search for similar items in EconPapers)
JEL-codes: C68 O21 O53 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:23:y:2012:i:1:p:1-17

DOI: 10.1016/j.chieco.2011.05.005

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