Equivalence Gain of the Global Financial Crisis: A Note

Abstract

By using the methodologies of Grinols (1984 , Journal of International Economics, 16[3–4], 271–293) and Grinols and Wong (1991 , Canadian Journal of Economics, 24[2], 428–449), we estimate the magnitudes of the welfare changes of China during the global financial crisis from 2007 to 2010. The results show that China’s welfare decreased in 2007, and the bursting of the housing bubble in the USA negatively affected China through international trade. However, the collapse of Lehman Brothers did not negatively affect China from 2008 to 2010. This may be because of the fiscal and monetary stimulus policies in the USA and China. JEL: F00, F53, F62