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The tale of two titans: US and China's distinct impact on the global economy

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  • Thomas, Lina

Abstract

This study employs a GVEC model to analyze the global influences of US and China's monetary policies. It reveals that a 25 basis point US interest rate hike prompts a -0.18 ppt change in foreign economies, predominantly indirectly via commodity price fluctuations and cross-country interactions. Conversely, China incites a -0.10 ppt direct effect, largely through the trade channel. In terms of foreign GDP fluctuations, the US accounts for a considerable 10.5 %, with its equity markets playing a significant role, compared to China's 2.3 % contribution. These results reveal distinct paths for US and China's global influence via financial and trade routes, respectively.

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  • Thomas, Lina, 2023. "The tale of two titans: US and China's distinct impact on the global economy," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009431
    DOI: 10.1016/j.frl.2023.104571
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    References listed on IDEAS

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    1. Thomas, Lina, 2023. "Ripple effect: Disentangling the global impact web of US monetary policy," Finance Research Letters, Elsevier, vol. 58(PB).

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