Beschreibung:
With the rapid increase in Chinese national strength and international influence, spillovers effects of China’s monetary policy have begun to emerge. This paper quantifies the spillovers and explores the transmission channels in a panel of 48 advanced and emerging economies. This paper uses a panel local projection model to identify Chinese monetary policy shock by the change in the 7-day repo rate in the interest rate swap market. The analysis reveals that China’s monetary tightening causes a significant drop in global output, with a larger decline in emerging economies than in advanced economies. Moreover, spillovers of Chinese monetary policy mainly depend on the trade channel, while the exchange rate channel and the financial channel are insignificant. Our results support the notion that China’s monetary policy spills over to foreign economies through driving global trade cycle