A Study on the Time-varying Correlation Mechanism of China's Export Trade and Output: Based on the Perspective of China-US Trade War

A Study on the Time-varying Correlation Mechanism of China's Export Trade and Output: Based on the Perspective of China-US Trade War


Author:Zhang xiaoyu, Liu yongfu Journal:World Economy Studies Date:2019 (04)

Abstract: Accurately identifying the dynamic correlation mechanism between export trade and output is of great significance to the current escalating China-US trade war. The article identifies the structural transformation of the long-term equilibrium relationship between exports and actual output through the breakpoint cointegration test method. On this basis, the nonlinear Granger causality
test method and impulse response curve analysis method are used to measure the short-term dynamic impact mechanism of export and actual output growth rate and the pulling effect of export on actual output. The estimation results show that: First, there is a significant structural breakpoint in the long-term equilibrium relationship between export trade and actual output ( the specific breakpoint is the third quarter of 2010) ; second, the export before the breakpoint is the Granger cause of output, but after the breakpoint, whether it is based on the linear Granger causality test or the nonlinear Granger causality test method, the export is not the Granger cause of the output; third, based on the impulse response curve analysis, after the breakpoint, the export to the output before the breakpoint shows a stronger pulling effect. It is worth noting that although the effect of exports on output has dropped significantly, the China-US trade war will still have an adverse impact on China's steady economic growth. In this view,in order to effectively buffer the infringement of the trade war, China needs to rapidly enhance the endogenous growth momentum and promote the transformation and upgrading of foreign trade.

Key Words: China-U.S. Trade War; Export Trade; Real Output; Structural Break; Nonlinear Granger Causality Test


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