China Spillovers: Aggregate and Firm-Level Evidence

Alexander Copestake, Melih Firat, Davide Furceri and Chris Redl

No 2023/206, IMF Working Papers from International Monetary Fund

Abstract: We estimate the impact of distinct types of slowdowns in China on countries and firms globally. First, we combine a structural vector autoregression framework with a broad-based measure of domestic economic activity in China to distinguish supply versus demand components of Chinese growth. We then use local projection models to assess the responses to such shocks of GDP growth (revenue) in other countries (firms). We find that: (i) both supply and demand slowdowns are associated with substantial declines in partner GDP and firm revenue; (ii) negative spillovers are larger in countries and firms with stronger trade links with China; and (iii) spillovers from Chinese supply shocks are stronger than spillovers from demand shocks, both at the aggregate- and firm-level.

Keywords: Supply-Demand Decomposition; China Spillovers; China spillover; supply and demand slowdown; spillovers from demand shocks; supply and demand demand shock; Supply shocks; Spillovers; Consumption; Structural vector autoregression; Exports; Global (search for similar items in EconPapers)
Pages: 57
Date: 2023-10-17
New Economics Papers: this item is included in nep-bec and nep-cna
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