Job Market Paper(s)

Job Market Paper 1: Econometric Evaluation of the China-US Trade War Effects

link: https://econpapers.repec.org/paper/kanwpaper/202419.htm

Abstract

The escalating trade war between China and the United States, initiated in 2018, has significantly impacted the trade pattern of these two nations. This event can be treated as an intervention which has led to a series of retaliatory actions, resulting in substantial economic and trade frictions between the two largest economies. This paper aims to analyze the economic impacts of the trade war effects using advanced econometric techniques. Our empirical study employs panel data analysis combined with a factor model, inspired by the methodologies of Hsiao, Ching and Wan (2012) and Bai, Li and Ouyang (2014), to construct trade patterns for both China and the US. By using annual trade data from multiple countries as a control group, we construct counterfactual results for China's and the US's imports, exports, and trade balance, respectively. Under a non-stationary setting, the counterfactual results indicate a significant decline in China's exports and a notable reduction in its trade surplus with the US post-2018. Meanwhile, US imports from China decreased, aligning with the trade war's goal of reducing the trade deficit, while US exports to China unexpectedly increased, possibly influenced by the Phase One trade agreement. Furthermore, our method, compared to other approaches, demonstrates superior accuracy and reliability in illustrating the effects of the trade war.

Job Market Paper 2: Mediation Analysis on China-US Trade War

link: https://econpapers.repec.org/paper/kanwpaper/202512.htm

Abstract

This paper examines the indirect effects of the ongoing China-US trade war on trade balances, employing a modified mediation analysis that includes lagged mediators to enhance the accuracy of traditional models. By integrating these lagged variables, our approach can capture the temporal dynamics. Through a comprehensive econometric analysis on indirect effects bypassing some mediators, we disentangle the direct and indirect effects of trade policies, highlighting the distinct impacts across major regions involved in trade between the two nations. Our findings suggest that the trade war has produced asymmetric effects on the trade balances of China and the US, with notable regional variation. For China, positive indirect effects are observed across all mediators, where rerouted supply chains helped maintain export flows under tariff pressures. In contrast, the US benefits more directly from the trade war, with strong direct effects and minor indirect effects across multiple regions. The inclusion of lagged mediators reveals the gradual adjustment of trade patterns over time, offering a more comprehensive perspective on how the trade war has reshaped global trade dynamics.