NEW PUBLICATION: This paper employs structural vector autoregression and local projection methods to examine the impacts of the deterioration in US-China political relations on Australia-China bilateral trade. By imposing a recursive identification scheme with different assumptions, the empirical results illustrate that worsening US-China political relations have a negative impact on Australian exports to and imports from China. Under a time-varying structural vector autoregression model, it is found that the deterioration in US-China political relations augments the negative impacts on Australia-China bilateral trade during the Trump’s administration. The empirical findings provide insightful policy suggestions to both Australian and Chinese governments.
These findings supports the maxim ‘a friend of a rival is a rival’.
You can find the BETA version, the abstract, the keywords and the online appendix in an older post:
You can quote this article as:
Yifei Cai, Jamel Saadaoui, Yanrui Wu, Political Relations and Trade: New Evidence from Australia, China and the United States, Scottish Journal of Political Economy, 2023.
Open Access thanks to a grant of The University of Western Australia: https://onlinelibrary.wiley.com/doi/10.1111/sjpe.12367.