Exogeneity tests for the Chinese and U.S. external balance: Empirical evidence of the connection and the subprime crisis

Artikel

This paper studies the global imbalances that occurred in the first years of the twenty-first century. The analysis encompasses the two biggest countries in the world: the U.S.A. and China. Many authors defend the assertion that the relationship between the current accounts of these two countries was one important cause of the subprime crisis. While the U.S.A. has increased its deficit in the last decade, China has improved its surplus. To investigate this relationship, this study performed exogeneity tests. Moreover, it conducted Granger causality tests following the approach of Toda–Yamamoto (1995). The results showed that there is a real causal relationship between the American and the Chinese external balance. Furthermore, the global imbalance between these two countries contributed to the subprime crisis, because the tests detected structural breaks for the external balances of America and China in 2008. The dynamics of the Chinese external balance changed after the subprime crisis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: EconomiA ; ISSN: 1517-7580 ; Volume: 15 ; Year: 2014 ; Issue: 3 ; Pages: 307-326 ; Amsterdam: Elsevier

Classification and Topics

• Classification: Wirtschaft ; Macroeconomic Aspects of International Trade and Finance: General ; Current Account Adjustment; Short-term Capital Movements ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data)
• Subject: Exogeneity test ; External balance ; Macroeconomic imbalance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): de Lima Junior, Luiz Antônio ; Vasconcelos, Cláudio Roberto Foffano ; Corrêa, Wilson Luiz Rotatori ; Filho, José Simão
• Event: Veröffentlichung
• (who): Elsevier
• (where): Amsterdam
• (when): 2014

Further information

• DOI: doi:10.1016/j.econ.2014.07.002
• Handle: http://hdl.handle.net/10419/179579
• Last update: 10.03.2025, 11:41 AM CET