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Federal Reserve Bank of Dallas
Globalization Institute Working Papers
China’s slowdown and global financial market volatility: is world growth losing out?
Paul Cashin
Kamiar Mohaddes
Mehdi Raissi
Abstract

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.


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Paul Cashin & Kamiar Mohaddes & Mehdi Raissi, China’s slowdown and global financial market volatility: is world growth losing out?, Federal Reserve Bank of Dallas, Globalization Institute Working Papers 270, 17 Mar 2016.
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DOI: 10.24149/gwp270
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