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Uncertainty shocks and monetary policy: evidence from the troika of China's economy.

Authors :
Hu, Chenpei
Shen, Zuiyi
Yu, Haijing
Xu, Bing
Source :
Economic Research-Ekonomska Istrazivanja; Dec2022, Vol. 35 Issue 1, p971-985, 15p
Publication Year :
2022

Abstract

Growth in China's economy is driven by the troika: consumption, investment and export. This paper examines the effect of uncertain events such as the global financial crisis in 2008, and the COVID-19 pandemic on the troika. Based on the construction of a new uncertainty index of China's economy, the relationship between uncertainty and growth in the troika is examined by using a TVP-VAR model. Results show that fluctuations in the uncertainty index during the COVID-19 epidemic had the greatest negative impact on consumption and investment at a magnitude of −0.27, notably greater than that during the period of the global financial crisis. The negative impact on export reached −0.73, smaller than that during the global financial crisis. Against a backdrop of the novel coronavirus epidemic, it is also found that expansionary monetary policies can have a relatively large impact on investment and export, reaching 1.75 and 1.57 respectively, while short-term impact on consumption is relatively weak, averaging at 0.51. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
1331677X
Volume :
35
Issue :
1
Database :
Complementary Index
Journal :
Economic Research-Ekonomska Istrazivanja
Publication Type :
Academic Journal
Accession number :
160904707
Full Text :
https://doi.org/10.1080/1331677X.2021.1952088