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Financial conditions and Sino-US tensions: A Granger causality analysis of diverging financial condition indicators

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  • Cai, Yifei
  • Shen, Yijuan
  • Uddin, Gazi Salah

Abstract

The study reveals that US financial conditions consistently Granger-cause variations in Sino-US political tensions, with the reverse causality observed only when using the Chicago Fed’s National Financial Conditions Index, while no such impact is found with the newly introduced US - Fed Financial Conditions Impulse on Growth Index, highlighting the importance of using diverse financial indicators to assess the impact of political tensions.

Suggested Citation

  • Cai, Yifei & Shen, Yijuan & Uddin, Gazi Salah, 2025. "Financial conditions and Sino-US tensions: A Granger causality analysis of diverging financial condition indicators," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325004623
    DOI: 10.1016/j.frl.2025.107199
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    Cited by:

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    Keywords

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    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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