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Interaction Between Trade, Conflict And Cooperation: The Case Of Japan And China

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  • Shoro Armstrong

Abstract

The complex interaction between trade and politics is analysed for the Japan-China relationship using Granger causality tests. The purpose is to determine the presence and direction of causation between trade and political events, both positive and negative, and to gauge an idea of the lag length of causality. Trade is growing quickly between Japan and China despite long standing political distance between the two countries. Results show that the economic relationship underpins and constrains the political relationship between Japan and China while an increase in positive political news and a decrease in negative political news promote trade to some degree.

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File URL: https://crawford.anu.edu.au/pdf/pep/apep-386.pdf
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Paper provided by Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University in its series Asia Pacific Economic Papers with number 386.

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Length: 39 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:csg:ajrcau:386

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  1. Grieco, Joseph M., 1988. "Anarchy and the limits of cooperation: a realist critique of the newest liberal institutionalism," International Organization, Cambridge University Press, vol. 42(03), pages 485-507, June.
  2. Diks, Cees & Panchenko, Valentyn, 2006. "A new statistic and practical guidelines for nonparametric Granger causality testing," Journal of Economic Dynamics and Control, Elsevier, vol. 30(9-10), pages 1647-1669.
  3. Polachek, Solomon W. & Seiglie, Carlos, 2007. "Trade, Peace and Democracy: An Analysis of Dyadic Dispute," Handbook of Defense Economics, Elsevier.
  4. Kang, Heejoon, 1985. "The Effects of Detrending in Granger Causality Tests," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 344-49, October.
  5. Robst, John & Polachek, Solomon & Chang, Yuan-Ching, 2006. "Geographic Proximity, Trade and International Conflict/Cooperation," IZA Discussion Papers 1988, Institute for the Study of Labor (IZA).
  6. Gartzke, Erik & Li, Quan & Boehmer, Charles, 2001. "Investing in the Peace: Economic Interdependence and International Conflict," International Organization, Cambridge University Press, vol. 55(02), pages 391-438, March.
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Cited by:
  1. Polachek Solomon W, 2011. "Current Research and Future Directions in Peace Economics: Trade Gone Awry," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(2), pages 1-14, January.

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