Whose trade flows are affected by Global Policy Uncertainty? asymmetric evidence from G7

Mohsen Bahmani-Oskooee and Amirhossein Mohammadian ()
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Amirhossein Mohammadian: University of Hawaii at Hilo

Journal of Economics and Finance, 2024, vol. 48, issue 1, No 1, 14 pages

Abstract: Abstract Baker et al. (Quart J Econ 131:1593–1636, 2016) introduced a news-based measure of uncertainty known as Economic Policy Uncertainty using country level data. The Policy Uncertainty Group now constructs a similar uncertainty measure known as Global Policy Uncertainty (GPU). In this paper, we assess the symmetric and asymmetric effects of GPU on trade flows of each of the G7 countries. While we find significant short-run effects on trade flows of all countries, short-run effects last into the long run, not in all seven countries. In the long run, we found that while exports of Canada, Italy, and Japan will be hurt by increased global uncertainty, those of France will be boosted. As for G7 imports, we found that imports of Canada, France, Germany, Italy, and the U.S. will be hurt by increased global uncertainty.

Keywords: Global policy uncertainty; G7; Trade flows; Asymmetric analysis (search for similar items in EconPapers)
JEL-codes: F14 F19 F37 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12197-023-09635-w

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