Cardiff University | Prifysgol Caerdydd ORCA
Online Research @ Cardiff 
WelshClear Cookie - decide language by browser settings

Banking and the macroeconomy in China: A banking crisis deferred?

Le, Vo Phuong Mai, Matthews, Kent Gerard Patrick ORCID: https://orcid.org/0000-0001-6968-3098, Meenagh, David ORCID: https://orcid.org/0000-0002-9930-7947, Minford, Anthony Patrick Leslie ORCID: https://orcid.org/0000-0003-2499-935X and Xiao, Zhiguo 2014. Banking and the macroeconomy in China: A banking crisis deferred? Open Economies Review 25 (1) , pp. 123-161. 10.1007/s11079-013-9301-9

Full text not available from this repository.

Abstract

The downturn in the world economy following the global banking crisis has left the Chinese economy relatively unscathed. This paper develops a model of the Chinese economy using a DSGE framework with a banking sector to shed light on this episode. It differs from other applications in the use of indirect inference procedure to test the fitted model. The model finds that the main shocks hitting China in the crisis were international and that domestic banking shocks were unimportant. However, directed bank lending and direct government spending was used to supplement monetary policy to aggressively offset shocks to demand. The model finds that government expenditure feedback reduces the frequency of a business cycle crisis but that any feedback effect on investment creates excess capacity and instability in output.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Advanced Research Computing @ Cardiff (ARCCA)
Business (Including Economics)
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Uncontrolled Keywords: DSGE model; Financial frictions; China; Crises; Indirect inference
Publisher: Springer
ISSN: 0923-7992
Last Modified: 12 Dec 2022 08:59
URI: https://orca.cardiff.ac.uk/id/eprint/58164

Citation Data

Cited 11 times in Scopus. View in Scopus. Powered By Scopus® Data

Actions (repository staff only)

Edit Item Edit Item