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How could a shock to growth in China affect growth in the United Kingdom?

Author

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  • Cesa-Bianchi, Ambrogio

    (bank of England)

  • Stratford, Kate

    (Bank of England)

Abstract

This article assesses how a shock to Chinese growth could affect the UK economy using an empirical model of the world economy that exploits the historical comovement between international business cycles. We find that a 1% slowing in China is likely to reduce UK GDP by around 0.1%. This impact arises mainly from the increasingly important role of China in the global economy - that is, via the United Kingdom’s indirect links with China through its main trading partners.

Suggested Citation

  • Cesa-Bianchi, Ambrogio & Stratford, Kate, 2016. "How could a shock to growth in China affect growth in the United Kingdom?," Bank of England Quarterly Bulletin, Bank of England, vol. 56(1), pages 4-11.
    • Handle: RePEc:boe:qbullt:0192
    as

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    References listed on IDEAS

    as
    1. Alessandro Rebucci & Ambrogio Cesa-Bianchi & M. Hashem Pesaran & TengTeng Xu, 2012. "China's Emergence in the World Economy and Business Cycles in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-75, January.
    2. Filippo di Mauro & L. Vanessa Smith & Stephane Dees & M. Hashem Pesaran, 2007. "Exploring the international linkages of the euro area: a global VAR analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(1), pages 1-38.
    3. Pesaran M.H. & Schuermann T. & Weiner S.M., 2004. "Modeling Regional Interdependencies Using a Global Error-Correcting Macroeconometric Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 129-162, April.
    4. Chowla, Shiv & Quaglietti, Lucia & Rachel, Lukasz, 2014. "How have world shocks affected the UK economy?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 167-179.
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    Cited by:

    1. Blagrave, Patrick & Vesperoni, Esteban, 2018. "The implications of China’s slowdown for international trade," Journal of Asian Economics, Elsevier, vol. 56(C), pages 36-47.

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