The Political Relation and Trade - The Case of US, China and Australia

Yifei Cai, Jamel Saadaoui and Yanrui Wu

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: This paper employs structural vector autoregression and local projection methods to examine the impacts of the deterioration in US-China political relations on Australia-China bilateral trade. By imposing a recursive identification scheme with different assumptions, the empirical results illustrate that worsening US-China political relations have a negative impact on Australian exports to and imports from China. Under a time-varying structural vector autoregression model, it is found that the deterioration in US-China political relations augments the negative impacts on Australia-China bilateral trade during the Trump’s administration. The empirical findings provide insightful policy suggestions to both Australian and Chinese governments.

Keywords: Structural vector autoregression, Local projection, Impulse response; US-China political relation; Australia-China trade. (search for similar items in EconPapers)
JEL-codes: C32 F14 F51 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cna, nep-int, nep-pol and nep-sea
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Working Paper: The Political Relation and Trade - The Case of US, China and Australia (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2022-22

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