The Tale of Two Titans : Us and China's Distinct Impact on the Global Economy
This study employs a GVEC model to analyze the global influences of US and China's monetary policies. It reveals that a 25 basis point US policy hike prompts a -0.18 ppt change in foreign economies, predominantly indirectly via commodity price fluctuations and cross-country interactions. Conversely, China incites a -0.10 ppt direct effect, largely through the trade channel. In terms of foreign GDP fluctuations, the US accounts for a considerable 10.5%, with its equity markets playing a significant role, compared to China's 2.3% contribution. These results reveal distinct paths for US and China's global influence via financial and trade routes, respectively