Description

China's GDP growth slowdown and a surge in global financial market volatility could both
 adversely affect an already weak global economic recovery. To quantify the global
 macroeconomic consequences of these shocks, we employ a GVAR model estimated for 26
 countries/regions over the period 1981Q1 to 2013Q1. Our results indicate that (i) a one percent
 permanent negative GDP shock in China (equivalent to a one-off one percent growth shock) could
 have significant global macroeconomic repercussions, with world growth reducing by 0.23
 percentage points in the short-run; and (ii) a surge in global financial market volatility could
 translate into a fall in world economic growth of around 0.29 percentage points, but it could also
 have negative short-run impacts on global equity markets, oil prices and long-term interest rates.

More publications in this series: Working Papers

More publications by: Paul Cashin ; Kamiar Mohaddes ; Mehdi Raissi