Li, L.Y. and Lu, P., 2020. Research on the business cycle transmission mechanism and related policies of China and B&R economies including coastal cities. In: Bai, X. and Zhou, H. (eds.), Advances in Water Resources, Environmental Protection, and Sustainable Development. Journal of Coastal Research, Special Issue No. 115, pp. 456-460. Coconut Creek (Florida), ISSN 0749-0208.
This paper applies the panel Simultaneous Equations Model (SEM) and Three-Stage Least Squares (3SLS) to studying how the transmission mechanisms of bilateral trade, specialized division of labor, financial integration and policy coordination affect the business cycle co-movement between China and the B&R economies including coastal cities. The study finds that: 1) Bilateral trade, financial integration, the coordination of fiscal and monetary policies and B&R intergovernmental MOU have a significant role in promoting the co-movement of the economic cycle, while the specialized division of labor reduces the co-movement. 2) In terms of policy effects, the positive impact of B&R intergovernmental MOU on the co-movement outweighs the sum of that brought by the coordination of fiscal and monetary policies. 3) Relative importance of each transmission mechanism varies significantly. The transmission mechanisms considering coastal cities, sorted by their impact on the co-movement in descending order, are: bilateral trade, financial integration, B&R intergovernmental MOU and the specialized division of labor.