Abstract
With the interest rate hike in the US and, more recently, in the UK, sudden stops in investments and capital reversals are apparent in the Asian emerging economies. A modelling approach is taken, using the Gâ€Cubed model, to simulate the potential global economic impacts, with a focus on Asia. The results demonstrate that myopic fiscal interventions in Asian emerging economies could result in shortâ€term stimulus, at the expense of longâ€term growth. The stimulus in advanced economies too would be shortâ€lived, diverting the benefits to unintended fractions in the global economy. Advanced economies that minimally change their trade and investment patterns tend to avoid distortionary impacts of the crisis.
Original language | English |
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Pages (from-to) | 1907-1927 |
Journal | The World Economy |
Volume | 43 |
Issue number | 7 |
DOIs | |
Publication status | Published - 2020 |