Asia’s rebalancing and growth

Soyoung Kim, Jong-Wha Lee and Warwick McKibbin

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The paper investigates the impact of Asia’s demand rebalancing and supply-side productivity changes on long-term economic growth in Asia and worldwide. Results from a panel vector autoregression model show that a productivity-neutral demand rebalancing shock has no permanent effect on Asian output, whereas labor productivity shocks have significant, positive, and permanent effects. Simulations using a global intertemporal multi-sector general equilibrium model suggest that labor productivity shocks increase the foreign GDP over time, but rebalancing shocks have a negative international spillover effect. In addition, labor productivity shocks helps rebalancing. Structural reforms promoting labor productivity growth along with rebalancing policies across Asia can achieve higher economic growth worldwide.

Keywords: Rebalancing; Export-led growth; Asia; VAR; Multi-country simulation model. (search for similar items in EconPapers)
JEL-codes: F41 F43 F47 O53 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-11
New Economics Papers: this item is included in nep-sea
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Journal Article: Asia's rebalancing and growth (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2017-66

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