Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
Series Vol. 51 , 01 December 2023
Open
Access | Article
The Spillover Effect of the Federal Reserve’s Aggressive Interest Rate Hike on China’s Stock Market in the Post-pandemic Era
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Abstract
In March 2022, the sudden shift in monetary policy by the Federal Reserve, which has been followed by eleven consecutive interest rate hikes totaling 525 basis points, has had a profound impact on the global economy. This article utilizes an ARIMA model to forecast the Nasdaq and SSEC indices and empirically analyzes the spillover effects of the Fed's interest rate hikes and balance sheet reduction on the Chinese stock market. In the short term, the unconventional monetary policies of the Federal Reserve are expected to have significant negative effects on the Chinese stock market. However, in the long term, China's financial market will gradually absorb these impacts and adjust the stock market trajectory according to its own economic cycle. Based on this empirical research, the article offers recommendations for Chinese policymakers on how to safeguard against such international financial events. It emphasizes the need to strengthen regulation, closely monitor the monetary policy directions of both countries, and make flexible adjustments to policies, avoiding one-size-fits-all approaches. As China serves as a representative of emerging economies, the findings of this study have implications for policymakers in other emerging economies as well.
Keywords
spillover effect, ARIMA model, interest rate hike
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
- ISBN (Print)
- 978-1-83558-149-0
- ISBN (Online)
- 978-1-83558-150-6
- Published Date
- 01 December 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/51/20230629
- Copyright
- 01 December 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited