 Shocks of crude oil prices and world trade policy uncertainty: How much do they matter for China’s trade balance with its three largest partners?Jungho Baek and Jee Hee Yoon Economic Analysis and Policy, 2023, vol. 78, issue C, 914-921 Abstract: The primary contribution of the current article is to use the SVAR methodology to study the dynamic responses of China’s trade balance with its three largest partners – the U.S., Japan, and Korea – to shocks of oil supply, global demand, and oil-specific demand, controlling for world trade policy uncertainty. We discover that the transmission of oil price shocks relies on the type of shock and different trading partners. Thus, China would need to consider the various oil shock components as the key factors determining the dynamics of the bilateral trade flows with its major partners. We also reveal that world trade policy uncertainty plays an important role in fluctuating China’s trade flows with the U.S., but not with Japan and Korea. When examining China–U.S. trade, therefore, it is important to take into consideration the uncertainty surrounding trade policies. Failure to do so may result in model misspecification in econometric models, which could lead to misleading conclusions. Keywords: China; Oil demand shocks; Oil supply shocks; SVAR; Trade balance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:914-921 DOI: 10.1016/j.eap.2023.04.037 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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