Uncertainty shocks and monetary policy

Evidence from the troika of China's economy

Bibliographic Data

ID15067349
AuthorsChenpei Hu (Renmin University of China), Zuiyi Shen (Zhejiang Ocean University), Haijing Yu (0000-0001-7950-601X, Zhejiang Gongshang University), Bing Xu (0000-0002-0235-6057, Wenzhou University, corresponding author)
Year2022
Volume35
Issue1
Pages971-985
Publication date2022-12-31
Open AccessYes
TypeARTICLE
VenueEconomic Research-Ekonomska Istraživanja (JOURNAL)
Journal identifiersISSN: 1331-677X • E-ISSN: 1848-9664
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/1331677x.2021.1952088
OpenAlexW3193759870
LanguageEN
References cited19

Growth in China’s economy is driven by the troika: consumption, investment and export. This paper examines the effect of uncertain events such as the global financial crisis in 2008, and the COVID-19 pandemic on the troika. Based on the construction of a new uncertainty index of China’s economy, the relationship between uncertainty and growth in the troika is examined by using a TVP-VAR model. Results show that fluctuations in the uncertainty index during the COVID-19 epidemic had the greatest negative impact on consumption and investment at a magnitude of −0.27, notably greater than that during the period of the global financial crisis. The negative impact on export reached −0.73, smaller than that during the global financial crisis. Against a backdrop of the novel coronavirus epidemic, it is also found that expansionary monetary policies can have a relatively large impact on investment and export, reaching 1.75 and 1.57 respectively, while short-term impact on consumption is relatively weak, averaging at 0.51

China · Economics · Financial crisis · Geography · International economics · Macroeconomics · Monetary economics · Political science · Politics · Energy, Environment, Economic Growth · Market Dynamics and Volatility · Monetary Policy and Economic Impact

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