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Whose trade flows are affected by Global Policy Uncertainty? asymmetric evidence from G7

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  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Amirhossein Mohammadian

    (University of Hawaii at Hilo)

Abstract

Baker et al. (Quart J Econ 131:1593–1636, 2016) introduced a news-based measure of uncertainty known as Economic Policy Uncertainty using country level data. The Policy Uncertainty Group now constructs a similar uncertainty measure known as Global Policy Uncertainty (GPU). In this paper, we assess the symmetric and asymmetric effects of GPU on trade flows of each of the G7 countries. While we find significant short-run effects on trade flows of all countries, short-run effects last into the long run, not in all seven countries. In the long run, we found that while exports of Canada, Italy, and Japan will be hurt by increased global uncertainty, those of France will be boosted. As for G7 imports, we found that imports of Canada, France, Germany, Italy, and the U.S. will be hurt by increased global uncertainty.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Amirhossein Mohammadian, 2024. "Whose trade flows are affected by Global Policy Uncertainty? asymmetric evidence from G7," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(1), pages 1-14, March.
    • Handle: RePEc:spr:jecfin:v:48:y:2024:i:1:d:10.1007_s12197-023-09635-w
    DOI: 10.1007/s12197-023-09635-w
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    More about this item

    Keywords

    Global policy uncertainty; G7; Trade flows; Asymmetric analysis;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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