Is US money causing China's output?

This paper tries to answer the long-standing question of whether money causes output. Instead of focusing on domestic monetary policy and Output, we analyze U.S. monetary policy and its possible effects on real Output in China. Our results indicate that the main monetary instrument in the U.S., the Federal Fund Rate, Granger Causes China's Output. A second monetary variable. U.S. money supply, does not seem to have a significant effect oil China's Output. The results are Supported by variance decompositions, which indicate that Federal Fund Rate shocks have ail effect on China's real output. The findings have important implications for policy makers in China that focus oil maintaining a high and stable economic growth. (C) 2009 Elsevier Inc. All rights reserved.