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Withstanding the Great Recession Like China
Author(s) -
Wen Yi,
Wu Jing
Publication year - 2019
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12223
Subject(s) - stimulus (psychology) , china , recession , economics , great recession , financial crisis , monetary economics , international economics , global recession , chinese economy , monetary policy , macroeconomics , keynesian economics , political science , psychology , psychotherapist , law
Data show that the United States, Europe, and even countries with lesser ties to the international financial system have suffered large permanent losses in aggregate output and employment since the financial crisis, despite unprecedented monetary injections. However, the symptoms of the Great Recession were not observed in China, despite a 45% permanent drop in its exports relative to historical trend. We study the precise channels through which the stimulus programs work in China and construct a simple model to rationalize the dramatically different impacts of stimulus programs across countries.