How Resilient Is ASEAN-5 to Trade Shocks? A Comparison of Regional and Global Shocks

Raghavan, Mala and Devadason, Evelyn Shyamala (2020) How Resilient Is ASEAN-5 to Trade Shocks? A Comparison of Regional and Global Shocks. Global Journal of Emerging Market Economies, 12 (1). pp. 93-115. ISSN 0974-9101, DOI

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This article studies the resilience of the ASEAN region to external shocks amid the unfolding effects of the USA–China trade war. It investigates and compares the effects of regional (ASEAN) and global (USA, China) shocks on ASEAN-5 using a Structural VAR (SVAR) framework. To identify the propagation of economic shocks and spillovers on ASEAN-5, the changing trade links between the economies considered are used to account for time variations spanning the period 1978Q1–2018Q2. Three major results follow from the analyses on trade links and output multiplier effects. First, the response of ASEAN-5 to shocks from the USA and China were more pronounced than regional shocks for the period after the Asian financial crisis. Second, the increasing cumulative impact of China’s shock on ASEAN was congruous to the growing trade links and trade intensities between ASEAN and China. Third, the USA and China were dominant growth drivers for the weaker trade-linked ASEAN partners. Taken together, the results suggest that global shocks matter for the region, and the economic resilience of the region to global shocks depends on indirect effects apart from the direct trade links. © 2020 Emerging Markets Institute, Beijing Normal University.

Item Type: Article
Uncontrolled Keywords: ASEAN-5; China; SVAR model; Trade links; USA
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 14 Aug 2020 06:24
Last Modified: 14 Aug 2020 06:24

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