South East Asian Financial Linkages and the Changing Role of China: Insights from a Global VAR

Simon Rudkin and Sen Min Wong

MPRA Paper from University Library of Munich, Germany

Abstract: As major financial crises, and the rise of China have shaped the new world order, so it is inevitable that those nations, especially in South East Asia, that once looked west for stability need to reappraise their situation. With the markets so intertwined in events, studying the propagation of equity price shocks within the wider set of macroeconomic variables allows us to say more about how relations are changing, and the likely impacts of any future crash. With data reaching into 2014, this paper is better able to reflect the post global financial crisis period. Using a Global Vector Autoregressive (GVAR) model we analyse these changes and what lies in store for South East Asia, and the ASEAN 4 in particular. Isolating three distinct trade patterns in our weight matrices responses to crises are clearly identifiable, and the opening up of China readily chartable. Indirect effects of China’s rise are highlighted; impacts on the ASEAN 4 being via other nations to date, but direct impact is appearing.

Keywords: Financial Linkages; Global VAR; Equity Prices (search for similar items in EconPapers)
JEL-codes: C51 F15 F36 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cna and nep-sea
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https://mpra.ub.uni-muenchen.de/65079/1/MPRA_paper_65079.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65001

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