Political relations and trade: new evidence from Australia, China, and the United States
Date
2023
Authors
Cai, Y.
Saadaoui, J.
Wu, Y.
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Journal article
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Scottish Journal of Political Economy, 2023; 71(3):253-275
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Abstract
This article employs structural vector autoregression and local projection methods to examine the impacts of the deterioration in the US–China political relations on bilateral trade between Australia and China. Three scenarios are considered to reflect the evolution of US geopolitical strategies in recent years such as “America First”, “China Threat Theory” and “The Protection of US Allies”. The simulation results illustrate that worsening the US–China political relations has a negative impact on Australian exports to and imports from China. It is also found that economic conditions in the US play a more important role in the transmission of this impact than those in China and Australia. In addition, various options are explored to check the robustness of the findings in this article.
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Copyright 2023 The Authors. Scottish Journal of Political Economy published by John Wiley & Sons Ltd on behalf of Scottish Economic Society. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License. (https://creativecommons.org/licenses/by-nc-nd/4.0/)