A Macro Assessment of China Effects on Malaysian Exports and Trade Balances

Chan, Tze-Haw and Lean, Hooi Hooi and Hooy, Chee Wooi (2013): A Macro Assessment of China Effects on Malaysian Exports and Trade Balances.

Abstract

This paper focuses on the impact of China’s export expansion on Malaysian monthly trading with to her 12 major trading partners over the liberalization era. Structural break(s) found mostly coincides with the Asia financial crisis and China’s accession into WTO and, regime shifts are evident in the long run relationship among the variables being studied. While the income effects are more apparent, real exchanges are rather insignificant and incorrectly signed for Malaysian bilateral trading. An attempt to correct current account imbalances by currency devaluation would thereby inappropriate. In addition, estimation of the trade balance models is more superior that complementary China effects are better captured for Malaysia trading with the advanced markets such as Australia, German, Japan, UK and the US. Such finding may partly due to the increase in global product fragmentation

• Item Type: MPRA Paper
• Language: English
• Keywords: Malaysian trading, China effect, cointegration, VAR, structural break
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics

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