- E-ISSN2288-2766
- KCI
E-ISSN : 2288-2766
A Study on the Determinants of Bilateral Trade: Evidence from China and United States of America
Abstract
Purpose – Recently, the trade war between China and United States of America has been escalating, which has also attracted worldwide attention. Based on this background, this paper sets China and United States of America as an example to exploit the determinants of biliteral trade between China and United States of America. Research design, data and methodology – A quarterly data from the first quarter of 2000 to the fourth quarter of 2017 will be employed to conduct an empirical analysis under some econometric approaches such as fully modified least squares and vector error correction estimates. Results – The results of this paper show that the two economic entities of China and Unites States of America have the greatest positive effect on biliteral trade between China and United States of America. The real exchange rate has a positive effect on biliteral trade between China and United States of America. The nominal exchange rate has a negative effect on biliteral trade between China and United States of America in the short run. United States of America’s average price has a positive effect on biliteral trade between China and United States of America in the short run. China’s average price has a negative effect on biliteral trade between China and United States of America in the short run. Meanwhile, the biliteral trade between China and United States of America also suffers from the economic crisis happened in 2008. Even through the biliteral trade between China and United States of America in the short run is deviate from the long-run equilibrium, there exist an error correction mechanism back to the long-run equilibrium. Conclusions – This paper provides some empirical evidences for both governments. Based on the results of this paper, both governments should take corresponding measures to promote the development of bilateral trade between China and United States of America.
- keywords
- Bilateral Trade, Determinants, Econometric Approaches.
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