International Transmission of Chinese Monetary Policy Shocks to Asian Countries

Cho, Yu-Jeong; Kim, Soyoung

doi:10.2139/ssrn.3966057

Cited by 3 publications

(5 citation statements)

References 2 publications

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“…Second, analyzing the heterogeneity of these effects, the response of emerging Asian economies to shocks in China's monetary policy had been nearly twice that of developed economies. These results complement the findings of Cho and Kim (2021) and Chen et al (2017). They attach much importance to the responses of Asian economies while ignoring the reactions of other economies, such as developed European economies.…”

Section: Introductionsupporting

confidence: 82%

“…The works of Cho and Kim (2021), Trinh et al (2021 are the most closely related to this research in terms of the international spillover effects of China's monetary policy. argue that China's monetary policy shock impacts domestic demand and global trade demand, ultimately influencing global output.…”

Section: Related Literaturementioning

confidence: 99%

“…However, they do not investigate different economies' responses to China's monetary policy shocks further. Cho and Kim (2021) and Trinh et al (2021) focus on spillover effects in Asian economies. They note that, in response to China's expansionary monetary policy shock, East Asian countries' exports to China ©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences decrease, and their imports from China increase via the expenditure switching effect.…”

Section: Related Literaturementioning

confidence: 99%

“…East Asian countries' exports of both final and intermediate goods to China also increase through the income absorption effect and the vertical trade structure across the East Asian region. Compared with the trade channel, emphasized by Cho and Kim (2021), Trinh et al (2021) provide evidence regarding the financial international transmission channel, which is limited to China's restrictions on capital flows and low financial development. Cho and Kim (2021) and Trinh et al (2021) do not examine other economies' reactions (i.e., European advanced economies), particularly those reliant on manufacturing, which are sensitive to monetary policy shocks because of the crucial role China plays in the global market for raw materials and intermediate production goods.…”

Section: Related Literaturementioning

confidence: 99%

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Global Spillovers of China's Monetary Policy

Lei,

Mei,

Zhang

2024

China and World Economy

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Spillovers from China's monetary policy have become increasingly obvious with China's growing importance in the global economy and its close economic and trade ties with the world. This study establishes a proxy structure vector autoregression model to investigate the magnitude and transmission channel of spillovers from China to global and regional economies, taking advantage of high‐frequency changes in asset prices in the financial markets to identify monetary policy shocks. The analysis reveals that China's monetary policy can affect the global economy by influencing international trade and commodity prices but there is no evidence of China's monetary policy affecting global financial variables. Tightness in China's monetary policy can cause a decline in world output whereas expansion in monetary policy can support global trade and output. This study also finds that the response of emerging Asian economies to China's monetary policy shock was nearly twice that of developed economies, while the transmission path did not change. The results of this study are consistent with the stylized fact that China's monetary policy plays an important role in the global trade and commodity cycle, although it does not drive the global financial cycle.

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Section: Introductionsupporting

confidence: 82%

Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

See 2 more Smart Citations

Global Spillovers of China's Monetary Policy

Lei,

Mei,

Zhang

2024

China and World Economy

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“…The central bank's announcement of the 7-days repo rate is utilized to gauge the pricebased monetary policy. This rate acts as a benchmark for the benchmark interest rate and indicates the supply and demand of funds, as well as the tightness of liquidity in the financial market (Chen et al, 2023;Cho & Kim, 2021). The 7-days repo rate decline indicates a shift towards a looser monetary policy.…”

Section: Monetary Policy (𝑀𝑂𝑁𝐸𝑌)mentioning

confidence: 99%

Monetary Policy and Deleveraging of Microfinance Institutions in China: A Dynamic Threshold Approach

Li,

Mohd Ashhari,

Hisyam Ab Razak

et al. 2024

IJARBSS

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By constructing the dynamic panel model and dynamic threshold model, this paper empirically analyzes the direct impact of monetary policy transmission on deleveraging initiatives of 204 microfinance institutions (MFIs) in China from 2012 to 2021, and the interactive effects of different monetary policy tools. The empirical investigations find that: the quantitative monetary policy transmission directs a negative impact on MFIs' deleveraging, while the direct macro-control of price-based monetary policy tool is not significant. When two monetary policy tools interact, the inhibitory effect of quantitative monetary policy on MFIs' deleveraging weakens once the price-based monetary policy tightening exceeds the threshold. Additionally, as the endogenous money multiplier amplifies the actual money quantity, price-based monetary policy starts to play its role in stable controllability, and MFIs gradually accept market-oriented interest rate mechanisms to adjust their deleveraging initiatives. The findings herein contribute to the significant implications of the study. The central bank should characterize the quantity control of quantitative monetary policy and the structural control of price-based monetary policy to formulate a scientific monetary policy. By improving the market-oriented interest rate mechanism of microfinance and coordinating with macroprudential regulations, it could achieve micro-prudential guidance on MFIs' deleveraging progress, as well accelerate economic transition and structural leverage adjustment.

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