The gains from catch-up for China and the US: An empirical framework

Mardi Dungey and Denise Osborn

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

Abstract: As China becomes more closely entwined with the US, positive shocks in the US translate into positive outcomes for China, but the extent of gain for the US during the convergence process is less clear. We develop an empirical framework of two interacting open economies in which Chinese GDP per capita moves towards convergence and cointegration with the US, resulting in a time-varying structural VAR model. As a result, the impulse responses of the two countries to shocks are sensitive to the timing of the shock. The changing effects of US shocks are evident in the analysis, which shows that over the convergence process both the US and China unambiguously benefit from the catch-up process.

Keywords: China; SVAR; convergence; catch-up (search for similar items in EconPapers)
JEL-codes: F41 F63 O11 O47 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2019-01
New Economics Papers: this item is included in nep-cna, nep-opm and nep-tra
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Related works:
Journal Article: The Gains from Catch‐up for China and the USA: An Empirical Framework (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-07

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