Macroeconomic Effects of China's Fiscal Stimulus

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Macroeconomic Effects of China's Fiscal Stimulus

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dc.creator Cova, Pietro
dc.creator Pisani, Massimiliano
dc.creator Rebucci, Alessandro 2011-02-07T21:21:40Z 2011-02-07T21:21:40Z 2010-10-12 2010-10-12 2014-08-29T09:19:18Z 2014-09-09T01:14:02Z 2014-09-09T01:14:02Z 2014-09-08
dc.identifier Fiscal Policy
dc.identifier Open Economy Macroeconomics
dc.identifier International Policy Coordination and Transmission
dc.identifier Fiscal Policies and Behavior of Economic Agents: General
dc.identifier Debt; Debt Management; Sovereign Debt
dc.description This paper analyzes the macroeconomic impact of Chinas 2009-2010 fiscal stimulus package by simulating a dynamic general equilibrium multi-country model of the world economy, showing that the effects on Chinas economic activity are sizeable: absent fiscal stimulus Chinas GDP would be 2.6 and 0.6 percentage points lower in 2009 and 2010, respectively. The effects are stronger under a US dollar peg because of the imported loose monetary policy stance from the United States. Higher Chinese aggregate demand stimulates higher (gross and net) imports from other regions, in particular from Japan and the rest of the world, and, only to a lesser extent, from the United States and the euro area. However, the overall GDP impact of the Chinese stimulus on the rest of the world is limited. These results warn that a fiscal policydriven increase in Chinas domestic aggregate demand associated with a more flexible exchange rate regime have only a limited potential to contribute to an orderly resolution of global trade and financial imbalances.
dc.format ACROBAT
dc.language en
dc.relation IDB Working Paper Series
dc.subject Crises Financeiras e Estabilização Econômica
dc.subject Financial Crises & Economic Stabilization
dc.subject Crisis financieras y estabilización económica
dc.subject Política Fiscal
dc.subject Fiscal Policy
dc.subject Política fiscal
dc.subject IDB-WP-211
dc.title Macroeconomic Effects of China's Fiscal Stimulus
dc.type Working Papers
dc.coverage China
dc.coverage Chine
dc.coverage China
dc.coverage China

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