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Transmission of China's Shocks to the BRIS Countries

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  • Mustafa Çakir
  • Alain Kabundi

Abstract

This paper investigates the impact of China on the BRIS countries, namely Brazil, Russia, India and South Africa. We identify Chinese supply and demand shocks and assess their transmission to BRIS in a structural dynamic factor model framework estimated over the period 1995Q2-2009Q4. The findings show that Chinese supply shocks are more important than its demand shocks. Supply shocks produce positive and significant output responses in all BRIS countries. While supply shocks have a permanent impact on the BRIS countries, the effects of demand shocks are short-lived. Both supply and demand shocks are transmitted through trade rather than financial linkages. However, the responses of BRIS countries are heterogeneous and therefore they require different policy responses
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  • Mustafa Çakir & Alain Kabundi, 2017. "Transmission of China's Shocks to the BRIS Countries," South African Journal of Economics, Economic Society of South Africa, vol. 85(3), pages 430-454, September.
    • Handle: RePEc:bla:sajeco:v:85:y:2017:i:3:p:430-454
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    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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