We investigate growth determinants for Mongolia as a small emerging economy with respect to China as its large neighbor. Our causality analysis during 1992 to 2017 reveals significant linear as well as nonlinear relationships in growth explanation. China's GDP and coal prices, together with some of their linear and nonlinear lagged components, predict Mongolia's GDP, where a 1 % increase in China's GDP relates to a 1.5% increase in that of Mongolia. Current exchange rates and the nonlinear components of lagged consumer prices also explain growth. Our results underline the role of macroeconomic drivers of growth in emerging economies. Copyright © 2020 Elsevier B.V. All rights reserved.
CitationChu, A. M. Y., Lv, Z., Wagner, N. F., & Wong, W.-K. (2020). Linear and nonlinear growth determinants: The case of Mongolia and its connection to China. Emerging Markets Review, 43. Retrieved from https://doi.org/10.1016/j.ememar.2020.100693
- Economic growth
- Energy prices
- Consumer prices
- Foreign direct investment (FDI)
- Exchange rates
- Multivariate Granger causality