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How resilient is ASEAN-5 to trade shocks? Regional and global shocks compared

Mala Raghavan () and Evelyn S Devadason
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Evelyn S Devadason: Faculty of Economics & Administration, University of Malaya, https://umexpert.um.edu.my/evelyns

No 2019-04, Working Papers from University of Tasmania, Tasmanian School of Business and Economics

Abstract: This paper revisits the resilience of the ASEAN region to external shocks amidst the unfolding effects of the US-China trade war. It investigates and compares the effects of regional(ASEAN) and global (US, China) shocks on ASEAN-5 using a structural VAR framework. To identify the propagation of economic shocks and spillovers on ASEAN-5, the changing trade links between the economies considered are used to account for time variations spanning the period 1978Q1 to 2018Q2. Three major results follow from the analyses on trade links and output multiplier effects. First, the response of ASEAN-5 to shocks from the US and China were more pronounced than regional shocks for the period after the Asian financial crisis. Second, the increasing cumulative impact of China’s shock on ASEAN was congruous to the growing trade links and trade intensities between ASEAN and China. Third, the US and China were dominant growth drivers for the weaker trade-linked ASEAN partners. Taken together, the results suggest that global shocks matter for the region, and the economic resilience of the region to global shocks depends on indirect effects, apart from the direct trade links.

Keywords: trade links; SVAR model; ASEAN-5; China; US (search for similar items in EconPapers)
JEL-codes: F41 C32 F62 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019
New Economics Papers: this item is included in nep-int and nep-sea
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Published by the University of Tasmania. Discussion paper 2019-04

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https://eprints.utas.edu.au/30947/1/2019-04_Raghavan_Devadason.pdf

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