Munich Personal RePEc Archive

The Effects of Chinese Interest Rates and Inflation: A Decomposition of The Fisher Effect

Bosupeng, Mpho (2016): The Effects of Chinese Interest Rates and Inflation: A Decomposition of The Fisher Effect.

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Abstract

China’s economic growth as well as global influence has been escalating in the last decades. The purpose of this investigation is to determine the impact of Chinese interest rates and inflation on other economies. The study uses data from 1982 to 2013 and applies the Toda and Yamamoto approach to Granger causality. Using data for nineteen countries, the results show that China has significant influence on interest rates and inflation dynamics of Costa Rica, Kenya and Nigeria. The study further shows that Japan and South Africa induce China’s interest rates as well as inflation. It is projected that as China’s economy continues to grow, her influence in global financial matters and other economies will also intensify.

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