Interaction between trade, conflict and cooperation: the case of Japan and China

Shiro Armstrong

Trade Working Papers from East Asian Bureau of Economic Research

Abstract: The complex interaction between trade and politics is analysed for the JapanChina relationship using Granger causality tests. The purpose is to determine the presence and direction of causation between trade and political events, both positive and negative, and to gauge an idea of the lag length of causality. Trade is growing quickly between Japan and China despite long standing political distance between the two countries. Results show that the economic relationship underpins and constrains the political relationship between Japan and China while an increase in positive political news and a decrease in negative political news promote trade to some degree.

Keywords: Conflict and Cooperation; trade; Granger Causality (search for similar items in EconPapers)
JEL-codes: C32 F10 F59 (search for similar items in EconPapers)
Date: 2010-01
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Interaction Between Trade, Conflict And Cooperation: The Case Of Japan And China (2010)
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