Asia's rebalancing and growth

Soyoung Kim, Jong-Wha Lee, Warwick J. Mckibbin

Research output: Contribution to journalArticle

Abstract

The paper investigates the impact of Asia's demand rebalancing and supply-side productivity changes on long-term economic growth in Asia and worldwide. Results from a panel vector autoregression model show that a productivity-neutral demand-rebalancing shock has no permanent effect on Asian output, whereas labour productivity shocks have significant, positive and permanent effects. Simulations using a global intertemporal multisector general equilibrium model suggest that labour productivity shocks increase the foreign GDP over time, but rebalancing shocks have a negative international spillover effect. In addition, labour productivity shocks help in rebalancing. Structural reforms promoting labour productivity growth along with rebalancing policies across Asia can achieve higher economic growth worldwide.

Original languageEnglish
JournalWorld Economy
DOIs
Publication statusAccepted/In press - 2018 Jan 1

Keywords

  • Asia
  • Export-led growth
  • Multicountry simulation model
  • Rebalancing
  • Vector autoregression

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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