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Two-way risk: Trade policy uncertainty and inflation in the United States and China

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  • Wang, Qi
  • Weng, Chen

Abstract

This paper takes China and the United States as examples to analyze the risk transmission between trade policy uncertainty (TPU) and inflation. Empirical results reveal that high inflation is highly sensitive to changes in TPU, while the impact of high inflation on TPU was more significant before 2010 in the United States. For China, low inflation is more sensitive to changes in TPU, and low inflation also affects TPU more significantly. Therefore, policy-makers in different regions can make appropriate adjustments to trade policies to address inflation and can also regulate inflation to stabilize finance and economic resources related to trade.

Suggested Citation

  • Wang, Qi & Weng, Chen, 2024. "Two-way risk: Trade policy uncertainty and inflation in the United States and China," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001843
    DOI: 10.1016/j.frl.2024.105154
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