Work

Financial conditions and Sino-US tensions: A Granger causality analysis of diverging financial condition indicators

Year: 2025

Type: article

Abstract: The study reveals that US financial conditions consistently Granger-cause variations in Sino-US political tensions, with the reverse causality observed only when using the Chicago Fed’s National Financial Conditions Index, while no such impact is found with the newly introduced US - Fed Financial Conditions Impulse on Growth Index, highlighting the importance of using diverse financial indicators to assess the impact of political tensions. • The causal link between US financial conditions and US-China political tensions is evaluated at quantiles. • Two datasets are used to describe US financial conditions. • Financial conditions cause political tensions, but reverse causality varies by indicator. • The causality is significant at extreme quantiles, but not at middle quantiles.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.107199

Authors: Yifei Cai, Yijuan Shen, Gazi Salah Uddin

Institutions: University of South Australia, Wuchang University of Technology, Linköping University

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,730