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China's Slowdown and Global Financial Market Volatility: Is World Growth Losing Out?
Author:
Mr. Paul Cashin
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Mr. Kamiar Mohaddes null

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Mr. Mehdi Raissi
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 063
Language:
English
Publication Date:
15 Mar 2016
DOI:
https://doi.org/10.5089/9781513590455.001
ISBN:
9781513590455
ISSN:
1018-5941
Pages:
22
Keywords:
WP; China’s slowdown; global financial market volatility; international business cycle; Global VAR; financial market volatility; world commodity market; GVAR model; slowdown pose; volatility shock; trade weight; growth spillover; commodity price linkage; China slowdown; Vector autoregression; Oil prices; Financial soundness indicators; Long term interest rates; Plurilateral trade; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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China's GDP growth slowdown and a surge in global financial market volatility could both adversely affect an already weak global economic recovery. To quantify the global macroeconomic consequences of these shocks, we employ a GVAR model estimated for 26 countries/regions over the period 1981Q1 to 2013Q1. Our results indicate that (i) a one percent permanent negative GDP shock in China (equivalent to a one-off one percent growth shock) could have significant global macroeconomic repercussions, with world growth reducing by 0.23 percentage points in the short-run; and (ii) a surge in global financial market volatility could translate into a fall in world economic growth of around 0.29 percentage points, but it could also have negative short-run impacts on global equity markets, oil prices and long-term interest rates.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund