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How resilient is ASEAN-5 to trade shocks? A Comparison of Regional and Global Shocks

Raghavan, M ORCID: 0000-0002-4123-5004 and Devadason, ES 2020 , 'How resilient is ASEAN-5 to trade shocks? A Comparison of Regional and Global Shocks' , Global Journal of Emerging Market Economies, vol. 12, no. 1 , pp. 93-115 , doi: 10.1177/0974910120906239.

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This article studies the resilience of the ASEAN region to external shocks amid the unfolding effectsof 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 economiesconsidered are used to account for time variations spanning the period 1978Q1–2018Q2. Three majorresults follow from the analyses on trade links and output multiplier effects. First, the response ofASEAN-5 to shocks from the USA and China were more pronounced than regional shocks for theperiod after the Asian financial crisis. Second, the increasing cumulative impact of China’s shock onASEAN 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 economicresilience of the region to global shocks depends on indirect effects apart from the direct trade links.

Item Type: Article
Authors/Creators:Raghavan, M and Devadason, ES
Keywords: trade links, SVAR model, ASEAN-5, China, USA
Journal or Publication Title: Global Journal of Emerging Market Economies
Publisher: Sage Publications India Pvt. Ltd.
ISSN: 0974-9101
DOI / ID Number: 10.1177/0974910120906239
Copyright Information:

Copyright 2020 Emerging Markets Institute, Beijing Normal University

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