NEW WORKING PAPER: 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.
![](https://www.jamelsaadaoui.com/wp-content/uploads/2023/05/HIRF-slice-blog.png)
You are welcome to download, share or comment the following working paper:
- Yifei Cai, Jamel Saadaoui, Yanrui Wu, The Political Relation and Trade – The Case of US, China and Australia (May 30, 2022). BETA Working Paper 2022-22, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4124255
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