China Spillovers: Aggregate and Firm-Level Evidence

China Spillovers: Aggregate and Firm-Level Evidence
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Volume/Issue: Volume 2023 Issue 206
Publication date: October 2023
ISBN: 9798400257353
$20.00
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Topics covered in this book

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Exports and Imports , Economics- Macroeconomics , Economics / General , 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

Summary

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.