Growth shocks in the United States and China

This paper estimates a block recursive VAR to evaluate the relative impacts of US and Chinese GDP growth shocks on Australia’s growth, controlling for the impacts of these shocks on growth in three of Australia’s other major trading partners. For the sample 1984-2016, shocks to US GDP growth have a larger impact on Australian GDP growth than do shocks to Chinese GDP growth. In rolling windows through the sample, the impact of Chinese GDP shocks on Australia’s growth increases substantially. For the sub-sample 2000-2016, shocks to US and Chinese GDP growth impact Australian GDP growth by the same magnitude.