The role of China in the transmission of shocks from the US to Australia

Huynh, Linh T. (2009). The role of China in the transmission of shocks from the US to Australia Honours Thesis, School of Economics, The University of Queensland.

       
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Author Huynh, Linh T.
Thesis Title The role of China in the transmission of shocks from the US to Australia
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2009
Thesis type Honours Thesis
Total pages 138
Language eng
Subjects 14 Economics
Formatted abstract       This thesis investigates the role of China in the transmission of shocks from the US to Australia. The method proposed is an extension of Canova (2005) VAR model from a two country specification to a three country specification and the incorporation of time-varying parameters following the approach in Primiceri (2005). The recently developed method if sign restrictions is used for the identification of the US structural shocks, and Bayesian techniques used for the estimation of models in empirical analysis. Two main conclusions are reached. Firstly, beside the US, China is an important foreign economy that has significant effects on the economic conditions of Australia. China amplifies the responses of the Australian variables to the US shocks. Therefore, ignoring the Chinese effect can lead to the under-react to the US shocks by policy makers. Secondly, Australian interest rate responses to the US shocks decreases over the last two decades. The implication is that policies effective in responding to the US shocks in last decade might no longer be effective in this decade. In other words, economic policies dealing with international shocks should be revised and updated over time.

 
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Created: Tue, 30 Nov 2010, 12:23:48 EST by Muhammad Noman Ali on behalf of The University of Queensland Library