Transmission of China's Shocks to the BRIS Countries. (7th July 2017)

• Record Type: Journal Article
• Authors: Çakir, Mustafa; Kabundi, Alain
• Is Part Of: South African journal of economics. Volume 85:Number 3(2017:Sep.)
• Page Start: 430
• Page End: 454
• Publication Date: 2017-07-07
• Subjects: C33 -- E32 -- F40 -- O57; Dynamic factor model -- supply and demand shocks -- sign restrictions -- BRIS; Economics -- Periodicals; South Africa -- Economic conditions -- Periodicals; Économie politique -- Périodiques; Afrique du Sud -- Conditions économiques -- Périodiques; Economie; ECONOMICS; Electronic journals; 330.5
• DOI: 10.1111/saje.12164
• Languages: English
• ISSNs: 0038-2280

Abstract

Abstract: This paper investigates the effects of China on the BRIS countries, namely Brazil, Russia, India and South Africa. We identify Chinese supply and demand shocks and assess their transmission to BRIS in a structural dynamic factor model framework estimated over the period 1995Q2‐2009Q4. The findings show that Chinese supply shocks are more important than its demand shocks. Supply shocks produce positive and significant output responses in all BRIS countries. And while these supply shocks have a permanent impact on the BRIS countries, the effects of demand shocks are short‐lived. Both supply and demand shocks are transmitted through trade rather than financial linkages. However, the responses of the BRIS countries are heterogeneous and therefore require country‐specific policy responses.