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China's Slowdown and Global Financial Market Volatility; Is World Growth Losing Out?

Paul Cashin (), Kamiar Mohaddes () and Mehdi Raissi

No 16/63, IMF Working Papers from International Monetary Fund

Abstract: China's GDP growth slowdown and a surge in global financial market volatility could both adversely affect an already weak global economic recovery. To quantify the global macroeconomic consequences of these shocks, we employ a GVAR model estimated for 26 countries/regions over the period 1981Q1 to 2013Q1. Our results indicate that (i) a one percent permanent negative GDP shock in China (equivalent to a one-off one percent growth shock) could have significant global macroeconomic repercussions, with world growth reducing by 0.23 percentage points in the short-run; and (ii) a surge in global financial market volatility could translate into a fall in world economic growth of around 0.29 percentage points, but it could also have negative short-run impacts on global equity markets, oil prices and long-term interest rates.

Keywords: Asia and Pacific; China’s slowdown, global financial market volatility, international business cycle, Global VAR, volatility, market volatility, financial market, trade, global financial market, Time-Series Models, International Business Cycles, Asia including Middle East, (search for similar items in EconPapers)
Date: 2016-03-15
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Related works:
Journal Article: China's slowdown and global financial market volatility: Is world growth losing out? (2017) Downloads
Working Paper: China’s Slowdown and Global Financial Market Volatility: Is World Growth Losing Out? (2016) Downloads
Working Paper: China’s slowdown and global financial market volatility: Is world growth losing out? (2016) Downloads
Working Paper: China’s slowdown and global financial market volatility: is world growth losing out? (2016) Downloads
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