What happens to Japan if China catches a cold?: A causal analysis of Chinese growth and Japanese growth |
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Authors: | Pu Chen Chih-Ying Hsiao |
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Institution: | aFaculty of Economics, Bielefeld University, Germany;bSchool of Finance and Economics, University of Technology, Sydney, Australia |
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Abstract: | In this paper, we conduct an empirical study to investigate the directionality of the dependence between the Chinese economy and the Japanese economy. Taking a probabilistic causal approach, we infer the causal dependence among the Japanese economy and the Chinese economy based on observed data. We find evidence that the Chinese growth has both contemporaneous and temporal causal effects on Japanese growth, though the effect is very small. We did not find any evidence that the Japanese growth might have temporal or contemporaneous causal effect on Chinese growth. |
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Keywords: | Inferred causality Recovery of the Japanese economy Sino-Japan economic links Time series causal models |
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