Two-way risk: Trade policy uncertainty and inflation in the United States and China

Qi Wang and Chen Weng

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: This paper takes China and the United States as examples to analyze the risk transmission between trade policy uncertainty (TPU) and inflation. Empirical results reveal that high inflation is highly sensitive to changes in TPU, while the impact of high inflation on TPU was more significant before 2010 in the United States. For China, low inflation is more sensitive to changes in TPU, and low inflation also affects TPU more significantly. Therefore, policy-makers in different regions can make appropriate adjustments to trade policies to address inflation and can also regulate inflation to stabilize finance and economic resources related to trade.

Keywords: Trade policy uncertainty; Inflation; Asymmetric time-varying Granger causality; The United States; China (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001843

DOI: 10.1016/j.frl.2024.105154

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