Estimating China's multplier in open economy by time-varying parameter model

Estimating China's multplier in open economy by time-varying parameter model


Author:Wang Jinming,Gao Tiemei Journal:World Economy  Date:2003(7)

Keywords Variable parameter model;The state space model;Marginal propensity to consume;Marginal propensity to import;Open economic multiplier

Abstract

China's accession to the WTO has greatly accelerated the pace of its integration into the world economy, to illustrate the ministry of foreign trade relations with China's economic growth and changes of after the accession to the WTO, this paper, by using variable Parameter Model (Time - varying Parameter Model) to measure Chinese multiplier under open economy. The result shows that in recent years, especially after the accession to the WTO, opening up the economy multipliers reduced amplitude is bigger, show that external demand pull effect on economic growth is abate, China to maintain its rapid economic growth is mainly thanks to the expansion of domestic demand.

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