TY - JOUR
T1 - Growth in China and the US: Effects on a small commodity exporter economy
AU - Osborn, Denise
AU - Vehbi, Tugrul
PY - 2015
Y1 - 2015
N2 - This paper provides a comparative quantitative analysis of the relative effects of economic growth in the US and China on a small commodity exporting country, namely New Zealand. The framework is an SVAR model with an exogenous global block consisting of GDP growth in the two major international economies and world commodity price inflation; regional influences are controlled through the inclusion of Australian GDP growth, while the domestic block consists of GDP growth, inflation, interest rates and changes in the real exchange rate. Using a sample period from 1986 to 2011, we find that although growth spillovers to New Zealand GDP are substantially greater from the US than from China, nevertheless growth in China induces larger responses in the New Zealand real exchange rate than does the US. Commodity price responses to growth in each of the large economies are also explored, while time-varying estimates provide some evidence of increasing responses of commodity prices and the New Zealand real exchange rate to growth in China
AB - This paper provides a comparative quantitative analysis of the relative effects of economic growth in the US and China on a small commodity exporting country, namely New Zealand. The framework is an SVAR model with an exogenous global block consisting of GDP growth in the two major international economies and world commodity price inflation; regional influences are controlled through the inclusion of Australian GDP growth, while the domestic block consists of GDP growth, inflation, interest rates and changes in the real exchange rate. Using a sample period from 1986 to 2011, we find that although growth spillovers to New Zealand GDP are substantially greater from the US than from China, nevertheless growth in China induces larger responses in the New Zealand real exchange rate than does the US. Commodity price responses to growth in each of the large economies are also explored, while time-varying estimates provide some evidence of increasing responses of commodity prices and the New Zealand real exchange rate to growth in China
U2 - 10.1016/j.econmod.2014.10.046
DO - 10.1016/j.econmod.2014.10.046
M3 - Article
SN - 0264-9993
VL - 45
SP - 268
EP - 277
JO - Economic Modelling
JF - Economic Modelling
ER -