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How growth deceleration in the PRC affects other Asian economies
Author(s) -
Lee Minsoo,
Park Donghyun,
Ramayandi Arief
Publication year - 2017
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/apel.12193
Subject(s) - china , economics , east asia , southeast asia , economy , economic geography , international trade , geography , ancient history , archaeology , history
Developing Asia has benefited greatly from the rise of the People's Republic of China (PRC), primarily through the trade channel. The PRC and its neighbours have collectively formed a regional production network, and the PRC is becoming an increasingly important source of final demand. Two empirical techniques are used to examine the likely economic impact of growth deceleration in the PRC on other Asian economies: (1) a single‐equation approach that captures the trade channel; and (2) a global vector autoregressive model that captures the effects beyond the trade channel. The results of both analyses confirm that deceleration in the PRC will have a non‐negligible negative effect on other economies, especially on East and Southeast Asian economies. An out‐of‐sample analysis to tease out the effects of slower growth in the PRC from the recent growth performance of selected Southeast Asian economies suggests that the PRC effect is contributing to the growth dynamics of this region but is not always dominant.