Does US partisan conflict matter for the Euro area?

Chak Hung Jack Cheng (), William Hankins and Ching-Wai (Jeremy) Chiu

Economics Letters, 2016, vol. 138, issue C, 64-67

Abstract: This paper highlights the international transmission of political uncertainty originated from a US partisan conflict shock, a newly identified shock that transmits a type of uncertainty beyond the economic policy uncertainty spillovers identified by Colombo (2013). Using the recently developed US Partisan Conflict Index (USPC) developed by Azzimonti (2014), we find that a one standard deviation USPC shock leads to a 0.2 percent decline in European industrial production. We also show that, compared with US policy uncertainty shocks, a shock to US partisan conflict creates deeper and more persistent spill-over effects to the Euro area.

Keywords: Partisan conflict; Economic policy uncertainty; U.S.–Euro area spillovers; Bayesian VAR (search for similar items in EconPapers)
JEL-codes: D72 E32 F42 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:138:y:2016:i:c:p:64-67

DOI: 10.1016/j.econlet.2015.11.030

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